Liquidity risk either due to a surplus or serious shortage in liquidity has a significant impact to the performance and sustainability of Islamic banks. Nevertheless, there are still no common agreement on specific factors that determine the liquidity risk in Islamic banking. This study investigates the determinant factors that affect the liquidity risk of Sudanese Islamic banks. A sample of 11 banks has been selected for a period of 7 years (2012 – 2018). The study is based on secondary data that analysed using Pearson correlation and multiple regression analysis for hypotheses tests. It investigated the explanatory variables of the bank’s cash position (CASH), investment in short-term securities (SECA), degree of financing the assets from customers’ deposits (DPAS) and bad financing and credit risk (NPL) as representatives of banks’ specific factors plus one microeconomic factor which is Gross Domestic Product (GDP). The analysis found a significant and negative relation of CASH and SECA with the liquidity risk in Islamic banks. On the other hand, the results reveal that the DPAS and NPL variables have a positive relation and significant, while the GDP seen to be irrelevant to liquidity risk in Islamic bank. The importance of the study is that it touches the most significant type of risk that most of Sudanese Islamic banks face, and the data analysed covers a relatively longer period of time than similar studies for a single country. We target that the study contributes in providing decision-makers with reasonable ground for prediction and managing the liquidity risk.
JEL Classification: G21, G17, G32.
This study aims to investigate the impact of liquidity, credit, and financial leverage risks on the financial performance of Islam banks in Sudan during the period of 2008 - 2018. Panel dataset of 143 observations from (13) banks has been used in this study. Two models of ROA and NPM have been constructed using robust random effects estimates for testing the study hypotheses. The independent variables consist of liquidity and credit risks plus the financial Leverage ratio. Credit risk that measured by nonperformance of loan (financing) and provision of loan (financing) loss ratios; while the liquidity risk measured by cash to deposits ratio, liquid assets to total assets ratio and total loan (financing) to total deposits ratio. The financial performance of Islamic banks in Sudan measured by the ratios of return on assets and net profit margin. The results reveal that the credit risk and financial leverage have significant and negative impact on the financial performance of Islamic banks in Sudan, whereas the liquidity risk generally found to be insignificant. Despite that, the liquidity risk in term of liquid assets to total assets ratio provides a significant and positive influence on the financial performance of Sudanese banks. Finally, the importance of this study is that it touches the most significant types of risks that Sudanese Islamic banks face during their operational cycles.
Profitability of Islamic banks has a significant effect on banks current and future decisions that do not only associate with shareholders and management, but also for various types of stakeholders. Despite that, scholars are not yet in agreement on common determinants of profitability in banking industry. This study aims to investigate the effect of bank-specific and industry characteristics along with macroeconomic variable (the inflation) on the profitability of a sample of 10 Islamic banks in Sudan. The study applied descriptive statistics, Persons’ correlation and multiple regression analysis on secondary data in order to determine the relationships and degree of significant of the independent variables to profitability. The profitability has been measured by two models; as return on assets (ROA) and net profit margin (NMP). The results reveal that bank capitalization (EQTA), operational cost efficiency (OCOI), investment in short-term securities (SECA) and inflation (INF) variables are significantly affecting the profitability of Islamic banks in Sudan. In contrary, the deposit-size of the bank (as market share) is not a significant determinant of banks’ profitability. Furthermore, the results indicate that quality of credit loan (NPL) is highly significant to NPM, while it is insignificant to ROA.
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