Systematic and Unsystematic Risk Determinants of Liquidity Risk between Islamic and Conventional Banks

International Journal of Economics and Financial Issues, 6(4), 1321-1327, 2016

7 Pages Posted: 12 May 2017

See all articles by Waeibrorheem Waemustafa

Waeibrorheem Waemustafa

Universiti Utara Malaysia

Suriani Sukri

Universiti Malaysia Perlis - School of Business Innovation & Techno (PPIPT)

Date Written: January 1, 2016

Abstract

The fundamental function of banking remains unchanged throughout the the history of banking theory. The management of risk, asset and liability remain the core function of banking. The early signal of banking crisis can be observed from the volatility of liquidity risk. Hence, this study attempted to investigate the influence of external and internal factors affecting liquidity risk of Islamic and conventional banks. This study employs time series regression analysis of Islamic banks and conventional banks from 2000 to 2010. The study found that Islamic banks maintain higher liquidity compared to conventional banks. The multivariate regression analysis shows that 4 out of 14 bank-specific factors and one macroeconomic factor significantly influence the liquidity risk of Islamic bank whereas conventional banks show that 5 out of 13 bank-specific factors are significant to liquidity risk.

Keywords: Liquidity Risk, Islamic Banking, Islamic Finance, Bank Specific Factor and Unsystematic

JEL Classification: B21, B22, B26, E36, E66, G21

Suggested Citation

Waemustafa, Waeibrorheem and Sukri, Suriani, Systematic and Unsystematic Risk Determinants of Liquidity Risk between Islamic and Conventional Banks (January 1, 2016). International Journal of Economics and Financial Issues, 6(4), 1321-1327, 2016. Available at SSRN: https://ssrn.com/abstract=2952270

Waeibrorheem Waemustafa (Contact Author)

Universiti Utara Malaysia ( email )

Sintok
COLGIS, UUM
Sintok, KY KEDAH DARUL 06010
Malaysia

Suriani Sukri

Universiti Malaysia Perlis - School of Business Innovation & Techno (PPIPT) ( email )

Perlis
Malaysia

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