文档介绍:Salman Syed Ali
LIQUIDITY RISK &LIQUIDITY MANAGEMENT
in Islamic banks
Distance Learning Course: Current Issues in Islhey come due without incurring unacceptable losses.〞*
* Office of the Comptroller (2000)
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LIQUIDITY RISK: Sources
Incorrect judgment and complacency
Unanticipated change in cost of capital
Abnormal behavior of financial markets
Range of assumptions used
Risk activation by secondary sources
Break down of payments system
Macroeconomic imbalances
Contractual forms
Financial Infrastructure deficiency
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Liquidity Risk & Contractual Forms
Profit Sharing Contracts
Murabaha
Salam
Istisna
Ijarah
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Resale not permitted
Resale permitted but non-existent market
Market exists but not active
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Example of LR in Murabaha
Primary LR
Secondary LR
Receivables are debt cannot be sold
Involves buying of commodity then selling on deferred payment
This brings in many operational, credit, dispute, and legal risks that can affect realization of receivables
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Analysis and Diagnosis
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Liquidity Surplus Problem
Excess Liquidity is the current norm with Islamic banks
Where to park for short-term?
Use of most Islamic modes requires longer tenor investment, murabaha leads to illiquidity (liquidity risk). This induces banks to hold more liquidity, but this is costly. This leads to very short-term murabaha low earnings.
Excess liquidity Use of commodity murabaha
Absence of LoLR facility is also a reason
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Examples of Problems with Commodity Murabaha
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High Proportion of Short-Term Int’l Murabaha in Total Murabaha,Bank-A (2002)
%
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High Proportion of Short-Term Int’l Murabaha inTotal Murabaha (Bank-B)
2004
2002
%
%
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Low Income from Short Term Murabaha (Bank-B)
Income from Other Murabaha 81 %
Income from Short-term Murabaha
%
Income from Other Murabaha %
2002
2004
Income from Short-term Murabaha
19 %
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Approaches to Liquidity Management
Asset Side Liquidity Management
Liabilities Side Liquidity