Comparison of factors influencing liquidity of European Islamic and conventional banks

Result code in IS VaVaI

<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F44555601%3A13510%2F21%3A43896295" target="_blank" >RIV/44555601:13510/21:43896295 - isvavai.cz</a>

Result on the web

<a href="http://economic-research.pl/Journals/index.php/oc/article/view/1893" target="_blank" >http://economic-research.pl/Journals/index.php/oc/article/view/1893</a>

DOI - Digital Object Identifier

<a href="http://dx.doi.org/10.24136/oc.2021.013" target="_blank" >10.24136/oc.2021.013</a>

Result language

angličtina

Original language name

Comparison of factors influencing liquidity of European Islamic and conventional banks

Original language description

Research background: The innovation in Shari.ah-compliant banking products has resulted in the rapidly increasing size of assets in Islamic banks worldwide. The assets of such banks have been growing twice as fast as those of conventional banks. Islamic banks do not depend on con ventional interest, speculation, or complex derivatives stemming from banking operations. Instead, their actions in respect of profit/risk sharing, and the clarity of the contract are consistent with Islamic Shari. ah principles, which seek to promote a more equal society. Purpose of the article: This research aims to identify and compare factors influencing the liquidity of Islamic and conventional banks in Europe. Candidate factors are sought amongst profitability,credit quality, credit expansion and capital adequacy indicators. Methodology: First, relevant financial ratios for 249 observations on Islamic banks and 2,306 observations on conventional banks are selected and compared for the period 2013-2017. Second,liquidity is explained separately for each type of banks by panel data regression to identify its determinants in a comparative context. Findings &amp; value added: The results indicate that the impact of the net interest margin on the liquidity ratio of Islamic banks is insignificant, which is obviously due to the prohibition of the use of interest (riba). To the contrary, in conventional banking a higher net interest margin results in a reduction in liquidity. Capital adequacy has a positive influence upon liquidity in both types of banks, but in Islamic banking, the influence is 5.4 times greater. The findings strongly suggest that the liquidity of Islamic and conventional banks is affected by different factors.

Czech name

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Czech description

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Type

J_imp - Article in a specialist periodical, which is included in the Web of Science database

CEP classification

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OECD FORD branch

10103 - Statistics and probability

Project

—

Continuities

I - Institucionalni podpora na dlouhodoby koncepcni rozvoj vyzkumne organizace

Publication year

2021

Confidentiality

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Name of the periodical

Oeconomia Copernicana

ISSN

2083-1277

e-ISSN

—

Volume of the periodical

12

Issue of the periodical within the volume

2

Country of publishing house

PL - POLAND

Number of pages

24

Pages from-to

375-398

UT code for WoS article

000691601400005

EID of the result in the Scopus database

2-s2.0-85111646145