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Liquidity Risk Determinants of Islamic Banks

Author

Listed:
  • Jaouad Elouali

    (ENCG - École Nationale de Commerce et de Gestion d'Agadir - Université Ibn Zohr = Ibn Zohr University [Agadir])

  • Lahsen Oubdi

    (ENCG - École Nationale de Commerce et de Gestion d'Agadir - Université Ibn Zohr = Ibn Zohr University [Agadir])

Abstract

The purpose of this article is to examine the impact of bank-specific variables on the liquidity risk of Islamic banks operating in 12 countries over the period from 2014Q1 to 2019Q3. Using the fixed effects technique panel data regression, we find that there is a significant positive impact of capital adequacy, asset quality and bank size on the liquidity risk measure. Moreover, cost-to-income ratio has a significant and positive association with liquidity risk of Islamic banks. The study also concluded that bank profitability has an insignificant relationship with the liquidity risk for the Islamic banks.

Suggested Citation

  • Jaouad Elouali & Lahsen Oubdi, 2020. "Liquidity Risk Determinants of Islamic Banks," Post-Print hal-04368556, HAL.
    • Handle: RePEc:hal:journl:hal-04368556
    DOI: 10.5281/zenodo.4440514
    Note: View the original document on HAL open archive server: https://hal.science/hal-04368556v1
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    References listed on IDEAS

    as
    1. Mosab Tabash, 2018. "An empirical investigation between liquidity and key financial ratios of Islamic banks of United Arab Emirates (UAE)," Business and Economic Horizons (BEH), Prague Development Center, vol. 14(3), pages 713-724, June.
    2. Hameeda Abu Hussain & Jasim Al‐Ajmi, 2012. "Risk management practices of conventional and Islamic banks in Bahrain," Journal of Risk Finance, Emerald Group Publishing Limited, vol. 13(3), pages 215-239, May.
    3. Heiko Hesse & Andreas (Andy) Jobst & Juan Solé, 2008. "Trends and Challenges in Islamic Finance," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 9(2), pages 175-193, April.
    4. Kharisya Ayu Effendi & Disman Disman, 2017. "Liquidity Risk: Comparison between Islamic and Conventional Banking," European Research Studies Journal, European Research Studies Journal, vol. 0(2A), pages 308-318.
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