The Moderating Role of Staff Efficiency in the Relationship between Bank¡¯s Specific Variables and Liquidity Risk in Islamic Banks of Gulf Cooperation Council (GCC) Countries

The efficiency of bank¡¯s staff plays a crucial role in managing and mitigating the financial risks like liquidity risk. The aim of this paper is to propose a conceptual model/framework for investigating the moderating role of staff efficiency on the relationship between bank¡¯s specific variables and liquidity risk in Islamic banks in Gulf Cooperation Council (GCC). GCC economies depend heavily on oil revenues which makes them subject to oil prices fluctuations. Therefore, liquidity in GCC banks, especially Islamic banks almost always suffers liquidity pressure. Thus, the issue of liquidity in this region has grown in importance in light of recent oil decline. Several attempts have been made to investigate the determinants of liquidity risk, yet the findings lack consistency. Most of the previous studies have ignored GCC region and have focused on other environments like credit risk but gave less attention to the moderating role of staff efficiency function in the Islamic banks with respect to liquidity risk. This paper offers a framework by adding a moderator of staff efficiency to the existing models of the bank¡¯s specific determinants of liquidity risk with a particular attention to the GCC countries which are heavily dependent on oil revenues and always are subject to the impact of oil prices instabilities. Many stakeholders should benefit from the outcomes of this study. It should pave the way for bankers, regulators, investors and researchers to have a better understanding and insight about the factors that affect liquidity risk in the aforesaid banks.