scholarly journals The Determinants of Liquidity Risk in Islamic Banks: A Case of Sudanese Banking Sector

2020 ◽  
Vol 4 (1) ◽  
pp. 38-49
Author(s):  
Ahmed Nourrein Ahmed Mennawi ◽  
Ahmed Ali Ahmed
Keyword(s):  
Banking Sector ◽  
Pearson Correlation ◽  
Liquidity Risk ◽  
Secondary Data ◽  
Jel Classification ◽  
Decision Makers ◽  
Islamic Banks ◽  
Short Term ◽  
Explanatory Variables ◽  
Specific Factors

Liquidity risk either due to a surplus or serious shortage in liquidity has a significant impact to the performance and sustainability of Islamic banks. Nevertheless, there are still no common agreement on specific factors that determine the liquidity risk in Islamic banking.  This study investigates the determinant factors that affect the liquidity risk of Sudanese Islamic banks. A sample of 11 banks has been selected for a period of 7 years (2012 – 2018).  The study is based on secondary data that analysed using Pearson correlation and multiple regression analysis for hypotheses tests.  It investigated the explanatory variables of the bank’s cash position (CASH), investment in short-term securities (SECA), degree of financing the assets from customers’ deposits (DPAS) and bad financing and credit risk (NPL) as representatives of banks’ specific factors plus one microeconomic factor which is Gross Domestic Product (GDP).  The analysis found a significant and negative relation of CASH and SECA with the liquidity risk in Islamic banks. On the other hand, the results reveal that the DPAS and NPL variables have a positive relation and significant, while the GDP seen to be irrelevant to liquidity risk in Islamic bank. The importance of the study is that it touches the most significant type of risk that most of Sudanese Islamic banks face, and the data analysed covers a relatively longer period of time than similar studies for a single country. We target that the study contributes in providing decision-makers with reasonable ground for prediction and managing the liquidity risk.  JEL Classification: G21, G17, G32.

RESIKO LIKUIDITAS BANK SYARIAH DI INDONESIA

El Dinar ◽  
2015 ◽  
Vol 2 (1) ◽  
Author(s):  
Esy Nur Aisyah ◽  
Putri Kurnia Widiati
Keyword(s):  
Banking Industry ◽  
Important Determinant ◽  
Liquidity Risk ◽  
The Other ◽  
Islamic Banks ◽  
Short Term ◽  
Explanatory Variables ◽  
The Public ◽  
The Poor ◽  
Public Money

<p><em>Abstract</em></p> <p><em>The banking industry is an industry that is vulnerable to the risk, as it involves the management of the public money that is temporary in the sense that it can be withdrawn at any time to be played back in the form of a variety of investments  such as the purchase of securities and fund placement. One of the bank's risk is liquidity risk which is the risk caused by the poor level of bank liquidity. Liquidity risk (liquidity risk) is the risk arising from the bank unable to meet short-term obligations in the community when needed, which is caused by the shortage of bank liquidity. Therefore, this study aimed to examine the determinants of the level of liquidity risk of Islamic banks in Indonesia for a period of four years from 2010 through 2013. Results showed that age, leverage, size and profitability is an important determinant of Indonesian Islamic banks liquidity risk. On the other hand, the research also found that the explanatory variables tangibility is not a strong explanatory variables to determine the liquidity risk of Islamic banks in Indonesia.</em></p>

scholarly journals Analysis of Some Inner Factors Affecting the Lending Rate and Commercial Bank Behavior

e-Finanse ◽  
2017 ◽  
Vol 12 (4) ◽  
pp. 111-119
Author(s):  
Zulfiqar Ali ◽  
Zahid Bashir ◽  
Muhammad Usman Arshad ◽  
Ahmed Ghazali ◽  
Muhammad Asif ◽  
...  
Keyword(s):  
Panel Data ◽  
Banking Sector ◽  
Pearson Correlation ◽  
Secondary Data ◽  
Commercial Banking ◽  
Capital Adequacy ◽  
Future Research ◽  
Factors Affecting ◽  
Explanatory Variables ◽  
Lending Rate

Abstract This research study aims to investigate the potential inner factors of the lending rate in the commercial banking sector of Pakistan. For this purpose, seven bank-specific explanatory variables (capital adequacy, management efficiency, liquidity, asset quality, investment to asset, loan to asset and deposit to asset ratios) were selected to determine their impact on lending behavior. Panel data techniques were emplyed on secondary data collected from the annual financial reports from a sample of ninteen major commercial banks over a period of 2007 to 2014. For the purpose of analysis, descriptive statistics, Pearson correlation and panel data techniques for regression analysis such as the fixed effect regression models were considered after conforming to the Hausman specification (1978) test. The findings of this study revealed that only four out of seven explanatory variables (ratio of investment to total assets, deposit to asset, loan to asset and liquidity ratio) have a significant relationship with lending rate. Two of the significant determinants (liquidity ratio and investment to asset ratio) are positively correlated while the remaining two significant explanatory variables (loan to asset ratio and deposit to asset ratio) are found negatively correlated with lending rate. The findings of the study are applicable to the banking sector of Pakistan. The current study ignored the use of macro factors like GDP and inflation, etc. which could be used in future research.

A Study on Working capital Management in Hindustan Petroleum Corporation Limited

2021 ◽  
pp. 164-168
Author(s):  
Sruthi B ◽  
Rashmi R
Keyword(s):  
Annual Report ◽  
Pearson Correlation ◽  
Secondary Data ◽  
Effective Management ◽  
Capital Management ◽  
Working Capital ◽  
Short Term ◽  
Working Capital Management ◽  
The Past ◽  
The Relationship

Working capital management is important for every organization as it refers to the effective management of current assets and current liabilities. The aim is to make sure that the firm is capable to continue its operations and it has sufficient cash flow to satisfy both maturing short-term debt and upcoming operational expenses. In this paper, an attempt has been made to study the management of working capital in Hindustan Petroleum Corporation Limited, a leading public sector enterprise in India over a period of 10 years (That is from 2009-10 to 2018-19). The paper also attempts to study the components of working capital and analyze the relationship between liquidity and profitability of HPCL. The study is based on secondary data collected from annual report of HPCL for the past 10 years, Pearson correlation and regression model are used for this purpose. From the study it is found that there is a significant relationship between liquidity and profitability.

The Position Of The Bank Indonesia As The Lender Of Last Resort After The Enactment Of Law No. 9 Of 2016 On Prevention And Mitigation Of Financial System Crisis

2017 ◽  
Vol 5 (4) ◽  
pp. 08-11
Author(s):  
Theresia Anita Christiani
Keyword(s):  
Data Analysis ◽  
Central Bank ◽  
Financial Services ◽  
Qualitative Data ◽  
Secondary Data ◽  
Jel Classification ◽  
Lender Of Last Resort ◽  
Short Term ◽  
Paper Review

Objective - This paper explores the role of the Indonesian Central Bank as the Lender of the Last Resort. Methodology/Technique - This research uses normative juridical research and secondary data. Findings - The results indicate that the Bank of Indonesian, in coordination with the Financial Services Authority, still has the authority to grant short-term loans for banks with liquidity issues. Nevertheless, the Bank of Indonesia does not have authority to provide emergency finance facilities where the funding is granted at the government's expense. Novelty - This paper uses normative juridical research and qualitative data analysis. Type of Paper - Review. Keywords: Authority, Bank, Crises, Position, Prevention, Indonesia. JEL Classification: K10, K20.

scholarly journals A Study of the Determinants of Cost and Revenue Efficiency in the Context of Islamic and Conventional Banks: The Case of Malaysia from 2006 to 2012

2016 ◽  
Vol 8 (7) ◽  
pp. 258
Author(s):  
Mohamed Ghroubi ◽  
Ezzeddine Abaoub
Keyword(s):  
Banking Sector ◽  
Generalized Least Squares ◽  
Decision Makers ◽  
Second Step ◽  
Islamic Banks ◽  
Regulatory Capital ◽  
Political Decision ◽  
Independent Variables ◽  
Conventional Banks ◽  
Revenue Efficiency

<p>In this paper, we examine the determinants of cost and revenue efficiency of Malaysian banks over the period 2006-2012. Three steps are undertaken to study a sample of 17 Islamic banks (IBs) and 20 conventional banks (CBs). In the first step, we assessed the competitiveness of the Malaysian banking sector. After solving the multicollinearity problem, as a second step, we selected three sets of independent variables: bank-specific, industry-specific and macroeconomic variables. In the last step, we estimated the efficiency models with the Feasible Generalized Least Squares (FGLS) method. The obtained results highlighted the importance of regulatory capital and size. As for the effect of competitiveness, it is found to be statistically significant only for revenue efficiency. These results may be useful to political decision-makers and regulatory authorities.</p>

scholarly journals Corporate social responsibility evaluation by different levels of management of Islamic banks and traditional banks: evidence from banking sector of Bangladesh

2016 ◽  
Vol 14 (3) ◽  
pp. 194-202 ◽  
Author(s):  
Md. Abdul Kaium Masud ◽  
Md. Humayun Kabir
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Banking Sector ◽  
Research Area ◽  
Jel Classification ◽  
Primary Data ◽  
Islamic Banks ◽  
Policy Makers ◽  
Corporate Social ◽  
Different Levels

The research aims to evaluate different levels of management understanding and performance on Corporate Social Responsibility (CSR) of traditional banks and Islamic banks in Bangladesh. Moreover, the paper points out the philosophy of both banks’ policy makers. The study is exclusively analytical in nature where 14 banks were selected on the basis of availability of branches in the research area. The research was based on primary data sources through a structured questionnaire. The research findings revealed that there is a gap between policy makers’ assurance of CSR contribution and its real implementation. The analysis found that Islamic banks are better than traditional banks with regard to the implementation of CSR policies. The result also showed that there are still some controversies on CSR performance of Islamic and traditional banks in general. The study also observed that Islamic, as well as traditional banks’ different levels of management conceive that CSR activities are performed by banks for their own interest rather than for social welfare. Therefore, it must be emphasized that good CSR policy is inevitable for all types of banks in Bangladesh. For the betterment of the society, as well as the banks, all levels of management should harmonize their CSR philosophy. Keywords: corporate social responsibility, management performance, traditional bank, Islamic bank, Bangladesh. JEL Classification: G21, M10, M14

scholarly journals The The Impact of Liquidity, Credit, and Financial Leverage Risks on Financial Performance of Islamic Banks: A Case of Sudanese Banking Sector

2020 ◽  
Vol 2 (2) ◽  
pp. p59
Author(s):  
Ahmed Nourrein Ahmed Mennawi
Keyword(s):  
Credit Risk ◽  
Financial Performance ◽  
Banking Sector ◽  
Negative Impact ◽  
Liquidity Risk ◽  
Positive Influence ◽  
Islamic Banks ◽  
Financial Leverage ◽  
Loan Financing ◽  
The Impact

This study aims to investigate the impact of liquidity, credit, and financial leverage risks on the financial performance of Islam banks in Sudan during the period of 2008 - 2018. Panel dataset of 143 observations from (13) banks has been used in this study. Two models of ROA and NPM have been constructed using robust random effects estimates for testing the study hypotheses. The independent variables consist of liquidity and credit risks plus the financial Leverage ratio. Credit risk that measured by nonperformance of loan (financing) and provision of loan (financing) loss ratios; while the liquidity risk measured by cash to deposits ratio, liquid assets to total assets ratio and total loan (financing) to total deposits ratio. The financial performance of Islamic banks in Sudan measured by the ratios of return on assets and net profit margin. The results reveal that the credit risk and financial leverage have significant and negative impact on the financial performance of Islamic banks in Sudan, whereas the liquidity risk generally found to be insignificant. Despite that, the liquidity risk in term of liquid assets to total assets ratio provides a significant and positive influence on the financial performance of Sudanese banks. Finally, the importance of this study is that it touches the most significant types of risks that Sudanese Islamic banks face during their operational cycles.

scholarly journals Macro Variable Effect Analysis and Non-Performing Financing (NPF) Against the Return On Asset (ROA) Islamic Banks In Indonesia Year 2008-2017

2020 ◽  
Vol 3 (1) ◽  
pp. 32-47
Author(s):  
Fikri Ainul Qolbi ◽  
Dwi Pratika Karisma ◽  
Imron Rosyadi
Keyword(s):  
Interest Rates ◽  
Secondary Data ◽  
Islamic Banks ◽  
Analysis Model ◽  
Short Term ◽  
Return On Assets ◽  
Effect Analysis ◽  
Variable Effect ◽  
Macro Variables

Islamic Banks is a business entity that raises and distributes funds from the community and for the community. The study was conducted to analyze the macro variables and NPF (Non-Performing Finance) to ROA (Return on Assets) to determine the relationship between short-term and long-term between variables. The analysis model used is the Eagle Granger ECM Stage Two test that uses secondary data from the serial data (time series). The results of this study indicate that NPF simultaneously, GDP, and interest rates affect the ROA. Partially GDP positive and significant effects in the long term and short term, NPF positive and significant effect in the long term, interest rate, and no significant positive effect on ROA.

scholarly journals Liquidity Risk Management in Full-Fledged Islamic Banking System

2020 ◽  
Vol 6 ◽  
pp. 1
Author(s):  
Mai M Abdo ◽  
Ibrahim A Onour ◽  
◽  
Keyword(s):  
Budget Deficit ◽  
Banking System ◽  
Liquidity Risk ◽  
Positive Association ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Short Term ◽  
The Government ◽  
Short Term Investment ◽  
Investment Portfolios

This study aims to assess the determinants of liquidity risk in the full-fledged Islamic banking system of Sudan, using panel data regression. The dependent variable in this research is the liquidity risk, which is determined as the extreme excess or extreme shortage of liquidity in each bank, based on the VaR approach, and the independent variables are bank size, investment, profit, and the budget deficit during the period 2012-2016. The authors’ findings indicate the bankspecific variables such as the size, investment, and profit are statistically significant, whereas the budget deficit variable is negatively associated with liquidity risk but is insignificant. The insignificance of the budget deficit variable is an indication of the government reliance on its deficit financing on debt financing, i.e., excessive money creation, as contrary to equity financing. Also indicated in the paper is that the investment variable has a positive and significant effect on liquidity risk, indicating that Islamic banks’ investment portfolios are dominated by short-term securities (sikook). This result supports the findings in the literature that investment portfolios in Islamic banks are likely to be dominated by short-term investment securities as a result of the absence of risk-hedging tools in the Islamic banking system, in general. The finding in the paper also indicates a positive and significant sign of profit coefficient with liquidity risk, which is similar to the positive association between higher risk and higher earnings relationships portrayed in the literature of corporate finance. The effect of the size indicator on liquidity risk reveals a positive and significant association, implying that larger banks are more likely to face liquidity risks of shortage as well as excess liquidity.

scholarly journals Islamic Money Market: An Instrument for Managing Liquidity Risk in Islamic Banks

ICR Journal ◽  
2014 ◽  
Vol 5 (2) ◽  
pp. 205-224
Author(s):  
Sekono Abiola Muttalib
Keyword(s):  
Risk Management ◽  
Liquidity Risk ◽  
Money Market ◽  
Islamic Banks ◽  
Financial Instruments ◽  
Short Term ◽  
Money Markets ◽  
Islamic Financial Institutions ◽  
Banking Institutions

The general consensus of financial experts is that liquidity is the lifeblood of any organisation, which is inclusive of Islamic banks. Hence, effective liquidity management is essential for the efficiency of banking institutions and the economy as a whole. The major provider of liquidity is the short-term money market instruments.  Islamic financial institutions just like their conventional counterparts use short-term mobilised deposit funds to finance long-term loans and projects which expose them to asset liability mismatches and thus, are vulnerable to liquidity problems. Addressing the potential liquidity risk due to the cash-flow mismatches requires an efficient and vibrant Islamic money market as it is an essential and integral part of Islamic financial system. It therefore raises the need for developing an Islamic money market where Shari’ah-compliant financial instruments are to be traded and operated based on Shari’ah principles. Although it is considered the surest approach to sound liquidity risk management in Islamic banks, the dilemma that Islamic money markets are facing now is acute shortage of Shari’ah-compliant financial instruments and the controversies surrounding the few available instruments. A successful liquidity risk management therefore requires ensuring well functioning Islamic money markets with some if not all controversies/addressed through embarking on development of new products or promoting innovation in order to enable Islamic banks to compete effectively with their conventional counterparts. Hence, this study attempts to present a better understanding of various Islamic money market instruments, their roles in managing liquidity and their relationship with liquidity risk management.

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