Liquidity Risk Management - A Study of Islamic Financial Institutions in Nigeria

Authors

  • Tijjani Ridwanlah Adewale Islamic Online University
  • Nissar Ahmed Yatoo

Abstract

This paper investigates short run and long run impact of specific determinant factors on liquidity risk of Islamic Financial Institutions in Nigeria. The study employs econometric methods such as unit root tests, Auto Regressive Distributed Lag (ARDL) model and error correction model to deeply investigate the issue. The empirical findings reveal the existence of the cointegration as well as short run and long run causality relationship between the determinant factors and liquidity risk. It was also found that about 83% of the past period liquidity risk deviation are from long-run equilibrium with the determinant factors which restore back in the current period. The research findings support short-long run economic theory and recommend development of regulatory framework as well as establishment of special purpose institutions that would manage short-long run liquidity risk of IFIs.

 

Keywords: Framework, IFIs, short run, long run, ARDL model, Error correction model, liquidity risk, determinant factors.

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References

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Published

2017-12-26

How to Cite

Adewale, T. R., & Yatoo, N. A. (2017). Liquidity Risk Management - A Study of Islamic Financial Institutions in Nigeria. Journal of Islamic Finance, 6(2), 058–066. Retrieved from https://journals.iium.edu.my/iiibf-journal/index.php/jif/article/view/217

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