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Determinates of Islamic banks liquidity

Author

Listed:
  • Ahmad Al-Harbi

Abstract

Purpose - The purpose of this paper is to investigate the determinants of Islam banks (IBs) liquidity. Design/methodology/approach - In this paper, the author uses a generalized least square fixed effect model on an unbalanced panel data set of all IBs operating in the Organization of Islamic Cooperation countries over the period 1989-2008. Findings - The estimation results show that all the determinants have statistically significant relationships with IBs’ liquidity but with different signs. On the one hand, foreign ownership, credit risk, profitability, inflation rate, monetary policy and deposit insurance negatively affected IBs liquidity. On the other hand, capital ratio, size gross domestic product growth and concentration have a positive nexus with IBs’ liquidity. Originality/value - According to the best of the author’s knowledge, this is the first empirical study to investigate the determinants of IBs liquidity using cross-country data with a large sample of IBs (110 banks) and over a long period (19 years). Also, the paper included variables that had not been discussed on the previous studies, which used cross-country data, such as efficiency, deposit insurance, monetary policy, concentration and market capitalization.

Suggested Citation

  • Ahmad Al-Harbi, 2020. "Determinates of Islamic banks liquidity," Journal of Islamic Accounting and Business Research, Emerald Group Publishing Limited, vol. 11(8), pages 1619-1632, February.
    • Handle: RePEc:eme:jiabrp:jiabr-08-2016-0096
    DOI: 10.1108/JIABR-08-2016-0096
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    Citations

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    Cited by:

    1. Pham Tien Dat & Kim Quoc Trung Nguyen, 2023. "Foreign ownership and national governance quality affect liquidity risk – case in Vietnam," Cogent Business & Management, Taylor & Francis Journals, vol. 10(2), pages 2244752-224, December.
    2. Muhammad Rabiu Danlami & Muhamad Abduh & Lutfi Abdul Razak, 2022. "CAMELS, risk-sharing financing, institutional quality and stability of Islamic banks: evidence from 6 OIC countries," Journal of Islamic Accounting and Business Research, Emerald Group Publishing Limited, vol. 13(8), pages 1155-1175, June.
    3. Dania AL-Najjar & Hamzeh F Assous, 2021. "Key determinants of deposits volume using CAMEL rating system: The case of Saudi banks," PLOS ONE, Public Library of Science, vol. 16(12), pages 1-15, December.

    More about this item

    Keywords

    Liquidity; Islamic banks; Macroeconomic factors; Microeconomic factors; G21; G32;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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