c) Based on the statement below, explain the "inspiration and business model of Islamic banks" that contributed to the high duration gap. (6 marks)

4.6. Key prudential implications

In addition to our discussion on the results, our findings as presented above have several implications, both theoretically and practically, on the existing body of knowledge. First, in terms of theory, the current study has extended the duration gap approach for the ICBS to a set of variables which can be monitored by the ICBS in their efforts at managing their duration gap in dual banking systems. The higher duration gap in the ICBS is attributed to the inspiration and business model of these ICBs. As a result of higher duration gaps, the ICBS are vulnerable to a significant loss of EVE or NW risk under an increasing benchmark rate regime. This in

Source: Chatta, J.A., Habshi S. M., Pacific Basin Finance Journal 2017.