LIQUIDITY RISK MANAGEMENT AND ITS IMPACT ON PERFORMANCE OF THE BANKS: A COMPARATIVE STUDY BETWEEN ISLAMIC AND CONVENTIONAL BANKS OF PAKISTAN, MALAYSIA AND INDONESIA
Liquidity risk Management is fundamental to sound banking practice. No doubt today all banking institutions face countless risks such as liquidity risk which can cause failure of a banking system. Therefore, a proper risk management technique is necessary for the existence and the growth of banks. Therefore, the purpose of this study is to examine the effectiveness of risk management practice that is liquidity risk their impact on performance or Profitability of Islamic and conventional banks. Liquidity risk is measured by loan to deposit ratio, cash to total asset ratio. Performance measure proxies were ROE and ROA for both Islamic and Conventional banks. Data are panel from 2011-2015 which is taken from the financial reports of Islamic and conventional banks. Regression analysis has been used to extract the results. The result of this study concluded that how this liquidity risk will affect the bank performance in conventional and Islamic banks.
USAMA YAQOOB and UMAIR KHALID