Liquidity Risk Management In The Islamic Rural Banking : Evidence From Indonesia

Mongid, Abdul (2015) Liquidity Risk Management In The Islamic Rural Banking : Evidence From Indonesia. Banks and Banking Systems, 10 (3). pp. 61-67. ISSN 1816-740

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Official URL: https://businessperspectives.org/journals/banks-an...

Abstract

As a financial intermediary, Islamic rural banks serve as maturity transformer such as transforming short term deposits into longer term financing. In serving this function, Islamic rural banks face risks, especially liquidity risk. Liquidity risk is regarded as a single risk that makes a bank experience difficulty in short term as it can generate reputation risk and insolvency. The author studies the determinant of liquidity risk position of Islamic rural banking using series of the data from Indonesia. ARIMAX regression methods are applied to study the behavior of liquidity risk in the industry. The result shows that liquidity risk is determined by asset management, leverage and capital adequacy. Asset size is also important as a growing asset improves bank liquidity position. Weaknesses in liquidity management in the Islamic rural banking market are detected. They set high liquidity ratio (up to 35%) as self insurance to anticipate liquidity risk. Further elaboration on this issue, especially on the manager’s side should be done to provide better understanding on liquidity risk management. Keywords: liquidity risk, ARIMAX, asset management, leverage, CAR.

Item Type: Article
Subjects: 300 - SOCIAL SCIENCE > 332.12 - BANKS & BANKING
Divisions: Lecturer
Depositing User: Perpustakaan STIE Perbanas Surabaya
Date Deposited: 23 Oct 2017 00:22
Last Modified: 22 Oct 2019 10:37
URI: http://eprints.perbanas.ac.id/id/eprint/2354

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