Show simple item record

dc.contributor.authorMahmood, Haroon
dc.date.accessioned2018-12-05T01:56:20Z
dc.date.available2018-12-05T01:56:20Z
dc.date.issued2018
dc.identifier.urihttps://hdl.handle.net/10182/10387
dc.description.abstractMaturity transformation risk and bank liquidity management practices have drawn substantial regulatory attention, in the wake of the 2007-08 global financial crisis. To harmonize the robust management and monitoring of maturity transformation risk in the Islamic banking industry, while endorsing Basel III liquidity regulations, the Islamic Financial Services Board (IFSB), recommended the implementation of a modified net stable funding ratio (NSFR). This was designed for Islamic banks as a structural measure for the maturity transformation function, to account for their unique balance sheet structure. This macro-prudential measure of maturity transformation risk refrains the banks from excessive reliance on unstable short-term market funding, which adversely effects banks’ financial performance and stability. Using a data-set of 55 full-fledged Islamic banks, from 11 different countries, over the period of 2006 – 2015, this study investigates the factors that are significantly associated with the maturity transformation risk in Islamic banks. We further investigate the causal relationship of maturity transformation risk with the profitability and stability of the Islamic banking sector. We utilize a two-step system Generalized Method of Moments (system-GMM) dynamic panel data estimation technique, on unbalanced panel. The empirical results reveal bank size, capital, and external funding dependence are significant contributors of increased maturity transformation risk. Whereas, less-risky liquid assets, risky liquid assets, and market power are limiting factors to the maturity transformation function of Islamic banks. Among the macroeconomic variables, inflation shows significant positive impact on the banks’ maturity transformation risk, during the sample period. However, we find no evidence for the effect of bank credit risk and economic growth on maturity transformation risk in the Islamic banking system. This study provides empirical evidence of a negative association of maturity transformation risk with the profitability of Islamic banks, suggesting the beneficial effects of the inclusion of the new regulatory liquidity requirement in Islamic banks. Besides, bank capital, asset quality and concentration are other important factors that influence banks’ profitability during the study period. Furthermore, the positive relationship between NSFR and stability supports the need to implement IFSB’s proposed NSFR requirement for the long-term resilience and stability of the Islamic banking industry. The results of this study remained consistent after applying a series of robustness checks including alternative measure of dependent variables, alternative estimation techniques and after controlling for industry-specific and macroeconomic factors.en
dc.language.isoenen
dc.publisherLincoln Universityen
dc.rights.urihttps://researcharchive.lincoln.ac.nz/page/rights
dc.subjectIslamic Financial Services Boarden
dc.subjectIslamic bankingen
dc.subjectnet stable funding ratioen
dc.subjectIFSBen
dc.subjectNSFRen
dc.subjectsystem-GMMen
dc.titleMaturity transformation risk, profitability and stability in Islamic banking: A new macro-prudential liquidity perspectiveen
dc.typeThesisen
thesis.degree.grantorLincoln Universityen
thesis.degree.levelDoctoralen
thesis.degree.nameDoctor of Philosophyen
lu.thesis.supervisorGan, Christopher
lu.thesis.supervisorNguyen, Cuong
lu.contributor.unitDepartment of Financial and Business Systemsen
dc.subject.anzsrc150201 Financeen


Files in this item

Default Thumbnail

This item appears in the following Collection(s)

Show simple item record