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Towards the development of Sharī'ah compliant high quality liquid assets for Islamic financial institutions

Engku Ali, Engku Rabiah Adawiah and Oseni, Umar Aimhanosi and Ellias, Muhd Ramadhan Fitri and Haron, Muhamad Nasir (2017) Towards the development of Sharī'ah compliant high quality liquid assets for Islamic financial institutions. Al-Shajarah: Journal of the International Institute of Islamic Thought and Civilization (ISTAC), 2017 (Special Issue Education). pp. 233-264. ISSN 1394-6870

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Islamic banks are required to be able to access and hold sufficientlevels of High Quality Liquid Assets (HQLA) as part of Basel IIIrequirements. Such HQLA are specifically meant to allow theIslamic banks to raise funds in money markets in the event ofliquidity shortage or in some cases for the funding of new profitableinvestments. Against this backdrop, this study examines existingefforts in developing Sharī’ah-compliant HQLA and the challengesIslamic financial institutions are facing in assessing such liquidinstruments. Beside the laudable efforts of a policy-drivensupranational institution in developing Sharī’ah-compliant HQLA,there has not been much effort in the global Islamic finance industryto develop more HQLAs. As a matter of fact, it is the overarchingdearth of such Sharī’ah compliant HQLA for liquidity managementthat led the Bank of England to commence work on the feasibility ofintroducing central bank liquidity facilities such as the proposedSharī’ah compliant fund based deposit in 2015 which is expected tobe ready for implementation by Spring 2018. This study also findsthat experts have considered the potential of gold as HQLA forbank’s liquidity management

Item Type: Article (Journal)
Additional Information: 949/63106
Uncontrolled Keywords: High Quality Liquid Asset, Basel III, liquidity management, Islamic banks
Subjects: H Social Sciences > HB Economic Theory > HB126.4 Islamic Economics
H Social Sciences > HG Finance > HG3368 Islamic Banking and Finance
H Social Sciences > HG Finance > HG4001 Financial management. Business finance. Corporation finance.
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button): Ahmad Ibrahim Kulliyyah of Laws
Institute of Islamic Banking & Finance (IIiBF)
Depositing User: Dr Engku rabiah adawiah Engku ali
Date Deposited: 23 Apr 2018 08:50
Last Modified: 21 Aug 2019 02:06
URI: http://irep.iium.edu.my/id/eprint/63106

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