Liquidity risk management in Islamic banks: evidences from Malaysia

After the global financial crisis, there are discussions in terms of liquidity risk management of banks, and in this context, many new tools, regulations, and mechanisms have been introduced by regulatory authorities. Islamic banks are also being governed by these tools and regulations. Liquidity risk is one of the important issues that needs attention in terms of resilience of Islamic banking sector. It can be defined as a shortcoming to cover financial liabilities and its management is related to managing the expected and unexpected cash outflows. A scrutiny of this important issue in an Islamic banking context is crucial to promoting efficiency, growth, and resilience of the Islamic financial industry.