Do cost efficiency affects liquidity risk in banking? Evidence from selected OIC countries

Syajarul Imna Mohd Amin, Shamsher Mohamad, Mohamed Eskandar Shah

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

Cost efficiency plays a significant role in bank risk taking behaviour. This paper examines the effect of cost efficiency on the liquidity risk of Islamic banks and conventional banks in 16 OIC countries from 1999 to 2013. The findings suggest that cost efficiency has a positive effect on liquidity risk. Other significant factors of liquidity risk include capital, bank specialization, credit risk, profitability, size, GDP and inflation whereas market concentration is not significant contributor to banking liquidity risk. There is weak evidence to support the notion that Islamic banks have higher level of liquidity risk than conventional banks. The findings imply the need to provide liquidity, probably through a well-functioning money market to lower liquidity risk in banking.

Original languageEnglish
Pages (from-to)55-71
Number of pages17
JournalJurnal Ekonomi Malaysia
Volume51
Issue number2
Publication statusPublished - 1 Jan 2017

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Banking
Liquidity risk
Islamic financial institutions
Bank risk taking
Factors
Profitability
Money market
Risk capital
Liquidity
Functioning
Market concentration
Credit risk
Inflation
Risk-taking behavior

Keywords

  • Cost efficiency
  • Islamic banking
  • Liquidity risk

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

Cite this

Do cost efficiency affects liquidity risk in banking? Evidence from selected OIC countries. / Mohd Amin, Syajarul Imna; Mohamad, Shamsher; Shah, Mohamed Eskandar.

In: Jurnal Ekonomi Malaysia, Vol. 51, No. 2, 01.01.2017, p. 55-71.

Research output: Contribution to journalArticle

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