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Liquidity Risk: Comparison between Islamic and Conventional Banking

Author

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  • Kharisya Ayu Effendi
  • Disman Disman

Abstract

The purpose of this study is to analyze the influence of micro-economy or bank-specific to the liquidity risk in Islamic and conventional banks. The data in this study using secondary data consists of 20 Islamic banks and 12 conventional banks obtained from seven countries, namely Albania, Saudi Arabia, Bahrain, Malaysia, Dubai, Qatar and Indonesia from 2009 to 2015.This research method is based on quantitative techniques using panel data regression. The results showed that in the Islamic bank found the best model is the fixed effect model while conventional banks best model is the random effect model. The variables that affect the liquidity risk in Islamic banks are the FLP and the NPF. While the variables that affect liquidity risk in conventional banks are FEXP, FLP, NPF and ROA.In Islamic banking capital adequacy, profitability and company size does not affect the liquidity risk, similar to Islamic banking but the profitability has a significant effect on the liquidity risk in conventional banking.

Suggested Citation

  • 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.
    • Handle: RePEc:ers:journl:v:xx:y:2017:i:2a:p:308-318
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    Cited by:

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    3. Mawih Kareem Al Ani & Syed Ahsan Jamil & Salma Ali Mashaani, 2021. "Are the Determinants of Credit Facilities of Islamic Banks different from Conventional Commercial Banks? An Omani Perspective هل تختلف محددات التسهيلات الائتمانية في المصارف الإسلامية عنها في المصارف ," Journal of King Abdulaziz University: Islamic Economics, King Abdulaziz University, Islamic Economics Institute., vol. 34(1), pages 45-64, January.
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    7. M. Kabir Hassan & Md Nurul Islam Sohel & Tonmoy Choudhury & Mamunur Rashid, 2024. "A systematic literature review of risks in Islamic banking system: research agenda and future research directions," Risk Management, Palgrave Macmillan, vol. 26(1), pages 1-29, February.
    8. Hussam Musa & Zdenka Musova & Viacheslav Natorin & George Lazaroiu & Martin Boda, 2021. "Comparison of factors influencing liquidity of European Islamic and conventional banks," Oeconomia Copernicana, Institute of Economic Research, vol. 12(2), pages 375-398, June.
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    10. Ahmed Nourrein Ahmed Mennawi, 2020. "The Impact of Liquidity, Credit, Financial Leverage Risks on Financial Performance of Islamic Banks: The Case of Sudanese Banking Sector," International Journal of Applied Economics, Finance and Accounting, Online Academic Press, vol. 8(2), pages 73-83.
    11. Didik Susilo & Sugeng Wahyudi & Irene Rini Demi Pangestuti, 2020. "Profitability Determinants of Manufacturing Firms in Indonesia," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(2), pages 53-64.
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    14. Ameni Ghenimi & Hasna Chaibi & Azhaar Lajmi, 2020. "The liquidity risk-credit risk-profitability trilogy: A comparative study between Islamic and conventional banks," Economics Bulletin, AccessEcon, vol. 40(3), pages 1900-1913.

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