The aim of this paper is to provide a thorough assessment of Islamic banks’ (IBs) liquidity risk compared to conventional banks (CBs). We firstly investigate the relationship between liquidity and credit risk. Employing a simultaneous structural equation approach, on a comprehensive dataset of 52 IBs and CBs, from selected Organization of Islamic Cooperation Countries for the period of 2007–2015, we find that credit risk and liquidity risk have negative relationship. We then investigate the relationship between liquidity risk and stability, finding a negative relationship just for IBs. We finally show that Islamic banks are better than conventional in managing risks.
Hassan, M. K., Khan, A., Paltrinieri, A., Liquidity risk, credit risk and stability in Islamic and conventional banks, <<RESEARCH IN INTERNATIONAL BUSINESS AND FINANCE>>, 2019; 48 (48): 17-31. [doi:10.1016/j.ribaf.2018.10.006] [http://hdl.handle.net/10807/177413]
Liquidity risk, credit risk and stability in Islamic and conventional banks
Paltrinieri, Andrea
Writing – Review & Editing
2019
Abstract
The aim of this paper is to provide a thorough assessment of Islamic banks’ (IBs) liquidity risk compared to conventional banks (CBs). We firstly investigate the relationship between liquidity and credit risk. Employing a simultaneous structural equation approach, on a comprehensive dataset of 52 IBs and CBs, from selected Organization of Islamic Cooperation Countries for the period of 2007–2015, we find that credit risk and liquidity risk have negative relationship. We then investigate the relationship between liquidity risk and stability, finding a negative relationship just for IBs. We finally show that Islamic banks are better than conventional in managing risks.
I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
