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Empirical Analysis of Liquidity Risk and Operational Risk in Islamic Banks

Islamic Banking and Finance Review

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Title Empirical Analysis of Liquidity Risk and Operational Risk in Islamic Banks
 
Creator Ramla Sadiq
Afia Mushtaq
Dr. Talat Hussain
 
Subject Liquidity Risk
Operational Risk
Islamic Banks, Pakistan
 
Description This paper aims to identify the impact of firm specific factors on liquidity risk and operational risk management for Islamic banks. The performance of Islamic financial institutions has been explored at length in regards to their operational differences, product offering and customer patronage. However, firm specific factors related to risk management have not been explored in Pakistan. This paper intends to fill that gap using empirical analysis. This study utilizes full-fledged Islamic banks operating in Pakistan during the period of 2006-2014. The ratio of capital to total assets us used as a proxy for liquidity risk and the ratio of return on assets is used as a proxy for operational risk. Size, NPL ratio, capital adequacy ratio, leverage and asset management have been used as independent variables. Results show that CAR, NPL ratio, leverage and asset management have a significant impact on liquidity risk. Size, car, and asset management have a significant impact on operational risk. The findings of this study can be utilized to create policies for enhanced risk management for Islamic financial institutions.
 
Publisher Department of Banking and Finance, University of Management & Technology, Lahore, Pakistan
 
Date 2015-03-03
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier https://journals.umt.edu.pk/index.php/IBFR/article/view/171
10.32350/ibfr.2015.02.07
 
Source Islamic Banking and Finance Review; Vol 2 (2015): IBFR 1436H/2015; 93-104
2221-5239
2413-2977
 
Language eng
 
Relation https://journals.umt.edu.pk/index.php/IBFR/article/view/171/162
 
Rights Copyright (c) 2015 Islamic Banking and Finance Review (IBFR)