Deposit insurance scheme : a comparative study between conventional and Islamic banking

Abstract

This study is a comparative study between conventional and Islamic banking deposit insurance scheme. First of all, it discusses the historical development of deposit insurance. The study examines practices in Malaysia in relation to deposit insurance that include its role in banking and financial stability. The study discusses also application of deposit insurance in conventional and Islamic banking as well as its coverage limit and types of eligible deposits accounts. At the same time, it highlights the concept of kafalah as well as liability of entrepreneur to loss and damage. The study also highlights similarities and dissimilarities between conventional and Islamic deposit insurance, and deposits accounts operations of conventional and Islamic banking. Then, it examines and analyses the principles of conventional and Islamic deposit insurance in term of concepts and operations. Finally, it provides suggestions for an alternative Islamic banking deposit insurance to the existing conventional one.