International Journal of Entrepreneurship (Print ISSN: 1099-9264; Online ISSN: 1939-4675)


Liquidity Risk Measurement Study Case (Jordan Islamic Banks)

Author(s): Hanan Ahmad Qudah, Khawla Kassed Abdo, Laith Akram Al-Qudah, Osama Kilani, Mutaz Al Manaseh, Mohammad Zakaria AlQudah

The objective of this study was to develop a liquidity risk measurement model for Islamic banks. Liquidity was calculated using a set of ratios: the investment ratio, the capital adequacy ratio, the financial performance ratio, asset return, and the equity return ratio. The study was based on a simple and multiple linear regression analysis, following the analytical and descriptive research method. This study included the three banks of Jordanian Islamic Bank, and only two banks in Jordan, Jordan Islamic Bank for Finance and Investment and the International Arab Bank, Safwa Islamic Bank, had been excluded due to the absence of sufficient data for the period under study. The study included the study population of Jordan Islamic Banks.

The study recommended that islamic banks issue short-term Islamic financial instruments that tackle the issue of liquidity and use this for interest-free debt rather than the central bank, which is unable to deal with Islamic banks in cases of liquidity deficiency.

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