ISSN: 2225-8329
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Efficient and effective liquidity management is vital to Islamic banking institutions to prevent banks from running the risk of inability to meet deposit demands. However, banking institutions face a dilemma if they have excess liquidity funds but do not invest them in generating more profits. Consequently, establishing the International Islamic Liquidity Management Corporation (IILM) became necessary to address liquidity issues in Islamic banking institutions. Yet, there is still some ambiguity about the role played by IILM. Thus, this study aims to examine the role of IILM in the liquidity risk management of Islamic banking institutions. This qualitative study using a content analysis approach, while the data analysis method is descriptive. The study found that IILM plays a role in developing short-term liquidity instruments and acquiring the underlying assets. IILM also ensures that the instruments issued for Islamic banking liquidity risk management must comply with Shariah principles and support the development of Islamic liquidity management infrastructure by encouraging more efficient cross-border investment flows globally. IILM plays an essential role in improving liquidity risk management by issuing short-term sukuk instruments that benefit Islamic banking institutions.
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In-Text Citation: (Ahmad et al., 2021)
To Cite this Article: Ahmad, A. A., Safiai, M. H., & Yusop, N. N. M. (2021). The Role of IILM in The Liquidity Risk Management of Islamic Banking Institutions. International Journal of Academic Research in Accounting Finance and Management Sciences, 11(3), 762–771.
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