Liquidity Management
Liquidity risk management. The case of Malaysia Islamic banking industry
1. Abstract
This study aims to analyses the liquidity risk in order to research about the relationship between liquidity risks and banking institution performance with the use of Return on Asset ( ROA ) and Return on Equity ( ROE ) of Islamic banks. The data collected from Malaysia Islamic banks during the time period from 2009 to 2012. Based on these data, this research tends to determine the impact of 2012 global financial crisis on the Malaysia Islamic banking system liquidity risk and performance. This paper hopefully to provide more knowledge on liquidity risk of Islamic banking sector and enrich the literature on Islamic banking risk management.
2. Introduction
Malaysia is one of the biggest Muslim countries in the world. Accordingly, the Islamic banking system played an important role in Malaysia banking industry. Islamic banking system is growing rapidly in Malaysia financial industry. (Khiyar,2011) indicated that the Malaysian Islamic banking system (MIBS), according to the Financial Stability Report (Bank Negara Malaysia, 2011), reached an impressive average of just over 22 percent in the year ending 31 December, 2011 and by the end 2011, out of the total 58 licensed banking institutions in Malaysia, 21 of them were Islamic. With more than one billion potential Muslims customer worldwide, Islamic banking demand is expected to growth rapidly in future. This growing gives this area of financial market large attention lead to the escalation in number of research about it. However, with the large and continuously develop of Islamic banking system, there are many aspect of this sector are not well investigated. Most of the researches aim to achieve the knowledge about the development and performance of this banking industry. In this regard, a concern which is relevant to ensuring healthy growth of this industry is risk management.
The competition advantage of a bank comes from
1. Abstract
This study aims to analyses the liquidity risk in order to research about the relationship between liquidity risks and banking institution performance with the use of Return on Asset ( ROA ) and Return on Equity ( ROE ) of Islamic banks. The data collected from Malaysia Islamic banks during the time period from 2009 to 2012. Based on these data, this research tends to determine the impact of 2012 global financial crisis on the Malaysia Islamic banking system liquidity risk and performance. This paper hopefully to provide more knowledge on liquidity risk of Islamic banking sector and enrich the literature on Islamic banking risk management.
2. Introduction
Malaysia is one of the biggest Muslim countries in the world. Accordingly, the Islamic banking system played an important role in Malaysia banking industry. Islamic banking system is growing rapidly in Malaysia financial industry. (Khiyar,2011) indicated that the Malaysian Islamic banking system (MIBS), according to the Financial Stability Report (Bank Negara Malaysia, 2011), reached an impressive average of just over 22 percent in the year ending 31 December, 2011 and by the end 2011, out of the total 58 licensed banking institutions in Malaysia, 21 of them were Islamic. With more than one billion potential Muslims customer worldwide, Islamic banking demand is expected to growth rapidly in future. This growing gives this area of financial market large attention lead to the escalation in number of research about it. However, with the large and continuously develop of Islamic banking system, there are many aspect of this sector are not well investigated. Most of the researches aim to achieve the knowledge about the development and performance of this banking industry. In this regard, a concern which is relevant to ensuring healthy growth of this industry is risk management.
The competition advantage of a bank comes from