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Assessment of liquidity management in Islamic banking industry


  • Rifki Ismal


Purpose - The purpose of this paper is to assess liquidity risk management (LRM) practices in Indonesian Islamic banking industry during the period 2000-2007. Design/methodology/approach - The paper constructs the LRM index (100 scale) which is composed of individual index of asset side; liability side; LRM policies; and the overall LRM index. Findings - The index produces a “good” grade for the liquidity management practices in the Indonesian Islamic banking industry, represented by three Islamic banks which capture 82 percent of the total market share of the industry. However, the breakdown of the index of every Islamic bank suggests various achievements. Research limitations/implications - It is found that the practices of LRM are not optimal yet based on some considerations explained in this paper. Further progressive actions have to be taken by the regulators and all industry's players to improve the LRM practices. Originality/value - To the best of the author's knowledge, this is the first paper trying to assess how good the LRM in Indonesian Islamic banking is.

Suggested Citation

  • Rifki Ismal, 2010. "Assessment of liquidity management in Islamic banking industry," International Journal of Islamic and Middle Eastern Finance and Management, Emerald Group Publishing, vol. 3(2), pages 147-167, June.
  • Handle: RePEc:eme:imefpp:v:3:y:2010:i:2:p:147-167

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    References listed on IDEAS

    1. Ahmed, Habib, 2011. "Risk Management Assessment Systems: An Application to Islamic Banks," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 19, pages 63-86.
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    Cited by:

    1. Mohammad Abdelkarim Almumani, 2013. "Impact of Managerial Factors on Commercial Bank Profitability: Empirical Evidence from Jordan," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 3(3), pages 298-310, July.


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