Developing Islamic Liquidity Management Instruments: Resolving the Impasse between Central Bank of Nigeria (CBN) and Jaiz Bank Plc

Shehu Aliyu

MPRA Paper from University Library of Munich, Germany

Abstract: Despite tremendous growth of Islamic finance globally, the phenomenon is relatively new in Nigeria. The first full-fledged Islamic bank, Jaiz Bank Plc, was licensed as a regional bank by the Central Bank of Nigeria (CBN) in 2011 and it started its operations in January, 2012. Over 3 years now, the apex regulatory body is yet to develop robust shari’ah complainant instruments for liquidity management of Islamic banks in Nigeria. This paper assesses the predicaments of Jaiz bank Plc over the last 3 years of its operations in the face of this challenge on the basis of secondary data from the financial statements of the Bank. Evidences on the basis of CAMEL analysis show that while the Bank performs quite well in respect to capital adequacy, assets and management quality, the Bank, however, suffers most, on average, with respect to earning quality and liquidity. The paper recommends that the CBN should, while the shari’ah compliant instruments are being awaited, introduce a measure of deposit-free and loan-free for Jaiz Bank plc and consider lowering the statutory liquidity ratio, all with a view of easing financial constraints of the Bank.

Keywords: Islamic liquidity management; CAMEL; Islamic Finance Institutions (search for similar items in EconPapers)
JEL-codes: E52 G2 G21 (search for similar items in EconPapers)
Date: 2015-04-19, Revised 2016-02-07
New Economics Papers: this item is included in nep-afr and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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