Modelling liquidity management in Islamic banks from a microeconomic perspective

Mouldi Djelassi and Jamel Boukhatem

Finance Research Letters, 2020, vol. 36, issue C

Abstract: The main objective of this paper is to examine the determinants of banking liquidity by explicitly integrating Islamic financial intermediation into a standard microeconomic model. Our model includes the banks’ liquidity reserves in line with profit-maximization motives and provides an analytical framework for interpreting the excess liquidity behavior commonly seen in the Islamic banking sector. Excess reserves result from an increase in a bank's deposits base combined with Islamic banks’ limited opportunities for financing and placement. The monetary policy rate appears to be a key instrument that central banks can use to resolve the problem of excess reserves.

Keywords: Liquidity management; Islamic banking; Modelling (search for similar items in EconPapers)
JEL-codes: C6 G21 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S154461231930488X
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:36:y:2020:i:c:s154461231930488x

DOI: 10.1016/j.frl.2019.101341

Access Statistics for this article

Finance Research Letters is currently edited by R. Gençay

More articles in Finance Research Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().