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Liquidity and Financial Stability Conventional versus Islamic Banks

Author

Listed:
  • Ameni Ghenimi

    (Faculty of Economic Sciences and Management of Tunis, Tunisia.)

  • Mohamed Ali Brahim Omri

    (College of Business Administration, Northem Border University, Kingdom of Saudi Arabia.)

Abstract

Purpose: This article examines the relationship between liquidity and banking financial stability. Methodology- This paper uses dynamic simultaneous-equation panel data models for 28 Islamic banks and 53 conventional banks over the period 2006-2013. Findings- Our results provide evidence of bidirectional causality between liquidity and banking financial stability for global panel, and in Islamic and conventional banks. As a result, banks have an incentive to take the direct impact of liquidity on stability. Recommendations- These empirical insights are of particular interest to regulators by encouraging banks to reduce the risks on their balance sheets and facilitating the liquidation of assets in a crisis.

Suggested Citation

  • Ameni Ghenimi & Mohamed Ali Brahim Omri, 2015. "Liquidity and Financial Stability Conventional versus Islamic Banks," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 3(9), pages 419-432, September.
    • Handle: RePEc:ijr:journl:v:3:y:2015:i:9:p:419-432
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    References listed on IDEAS

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    More about this item

    Keywords

    Bank liquidity; Bank stability; Islamic bank Conventional bank;
    All these keywords.

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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