Bank liquidity risk and capital structure: a conceptual review of theoretical and empirical research on Islamic banking perspective

Raja Harun, Tengku Wasimah and Mustaffa Kamil, Nazrol Kamil and Haron, Razali and Ramly, Zulkufly (2021) Bank liquidity risk and capital structure: a conceptual review of theoretical and empirical research on Islamic banking perspective. International Journal of Academic Research in Accounting, Finance and Management Sciences, 11 (3). pp. 539-553. E-ISSN 2225-8329

PDF - Published Version Restricted to Registered users only Download (492kB) | Request a copy

Abstract

This paper conducts a comprehensive review of relevant empirical literature on the impact of capital structure on bank’s liquidity risk. Based on the existing literature, capital structure has a considerable impact on banks’ liquidity risk either in positive or negative thought. However, we discover that empirical evidence on all of this relationship is heavily skewed in favour of conventional banks and firm’s perspective. As a result, we urge that further research should be done in this area specifically in Islamic banking standpoint in order to gain a better understanding of the impact of capital structure on banks liquidity risk. This is due to the fact that the optimal capital structure for bank will trade-off the effects of bank capital specifically on the liquidity creation. Therefore, it is hoped that this paper can give a guideline to the policymakers, banking regulators, shareholders and other stakeholders to balance between capital structure and liquidity creation in order to evade from the issues of bank run and insolvency.

Item Type:	Article (Journal)
Subjects:	H Social Sciences > HG Finance H Social Sciences > HG Finance > HG178 Liquidity
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button):	Institute of Islamic Banking & Finance (IIiBF)
Depositing User:	Dr. Razali Haron
Date Deposited:	20 Oct 2021 10:52
Last Modified:	20 Oct 2021 10:52
URI:	http://irep.iium.edu.my/id/eprint/93146

Actions (login required)

View Item