Liquidity Risk and Performance: The Case of Bahrain and Malaysian Banks

Norazwa Ahmad Zolkifli, Mohamad Abdul Hamid and Hawati Janor

This paper presents the determinants of liquidity risk and performance in conventional and Islamic bank. The data have collected from 2008 to 2014 and panel data analysis was used. The results revealed that the most significant factor is the capitalization. Capitalization also has a strong relationship with performance using parsimonious model. The best model from the result is Bahrain conventional bank. Based on finding, problem of liquidity risk related to regulatory requirement will decrease and this will gives banks to increase their profitability and improve their financial performance.

JEL Codes: G20, G32

Key Words: Liquidity Risk, Performance, Risk Management, Islamic Bank, Conventional Bank

DOI : http://dx.doi.org/10.21102/gefj.2015.09.82.07