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An Examination of Factors Affecting Excess Liquidity, Evidence from Islamic Banks in Malaysia

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The Future of Risk Management, Volume II

Abstract

The excess liquidity exacerbated by the absence of Shariah-compliant products as well as the modus operandi in the Islamic banks has been an issue. Excess liquidity is costly since it creates bank challenges like poor asset utilization and low competitiveness as well as causes anomalies in the effective monetary policy transmission and the development of the financial market. The aim of our research is to evaluate the determining factors of the excess liquidity in the Islamic banks of Malaysia by applying fixed effect and random effect model. Findings underline that the availability of short-term Sukuk has a statistically significant negative impact on the excess liquidity. Therefore, the presence of Sukuk in the market could eradicate the inefficiency of low asset utilization for the Islamic banks.

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Author information

Authors and Affiliations

  1. Taylor’s University, Subang Jaya, Malaysia

    Md Hakim Ali

  2. INCEIF, Lorong Universiti A, Kuala Lumpur, Malaysia

    Saiful Azhar Rosly

  3. University of Turin, Turin, Italy

    Maha Radwan

  4. Department of Management, University of Turin, Turin, Italy

    Silvana Secinaro

Authors
  1. Md Hakim Ali
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  2. Saiful Azhar Rosly
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  3. Maha Radwan
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  4. Silvana Secinaro
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Corresponding author

Correspondence to Maha Radwan .

Editor information

Editors and Affiliations

  1. University of Turin, Turin, Italy

    Paola De Vincentiis

  2. Department of Management, University of Turin, Turin, Italy

    Francesca Culasso

  3. University of Turin, Turin, Italy

    Stefano A. Cerrato

Appendix

Appendix

Table 4 Variable definitions and data sources
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Ali, M.H., Rosly, S.A., Radwan, M., Secinaro, S. (2019). An Examination of Factors Affecting Excess Liquidity, Evidence from Islamic Banks in Malaysia. In: De Vincentiis, P., Culasso, F., Cerrato, S. (eds) The Future of Risk Management, Volume II. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-16526-0_10

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  • DOI: https://doi.org/10.1007/978-3-030-16526-0_10

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  • Publisher Name: Palgrave Macmillan, Cham

  • Print ISBN: 978-3-030-16525-3

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