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

Waeibrorheem Waemustafa () and Suriani Sukri
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Suriani Sukri: School of Business Innovation and Technoprenuership, UniMap, Jln Kangar Alor Setar, 01000, Kangar Perlis, Malaysia.

International Journal of Economics and Financial Issues, 2016, vol. 6, issue 4, 1321-1327

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 (search for similar items in EconPapers)
JEL-codes: E58 G21 E40 E43 G01 (search for similar items in EconPapers)
Date: 2016
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