Impact of Islamic Securitization (Sukuk) on Islamic Banks Liquidity Risk in Light of Basel III Requirements

Bakhita Hamdow Gad Elkreem Braima
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Bakhita Hamdow Gad Elkreem Braima: Investment & Finance Department, University of Tabuk, Tabuk, Saudi Arabia

International Journal of Finance & Banking Studies, 2017, vol. 6, issue 1, 85-100

Abstract: This study aims to investigate the relation between Islamic securitization representing in Sukuk, and the Islamic banks ‘liquidities in light of Basel3 requirements. So that the study investigatesthree variables which include Islamic securitization as independent variable; net cash from financing activities and net noncore funding dependence ratio as dependent variables.The study follows quantitative method by employing cross sectional data context analysis. The data is collected from six banks over six countries through the period 2011-2013. Pearson regression is used to measure causal relation between Sukuk and Net Stable Fund Ratio (NSFR), hence the model is developed to describe the relation. The study uses net noncore funding dependence ratio as (NSFR) which was required by Basel III. The regression result finds that there is positive relation between Sukuk and NSFR for Islamic banks.Also the study uses loans / deposits ratio to discover the relation between Sukuk and Islamic banks ‘liquidity risk,so the regression test shows that there is positive relation between Sukuk and loans / deposit ratio.

Keywords: Sukuk; NSFR; Liquidity Risk; Basel (search for similar items in EconPapers)
Date: 2017
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