Year
2016
Country
Qatar
Language
English
Abstract
| In 2007,the financial crisis revealed that some banks were complying well with the Basel Il "capital adequacy ratio", but faced a severe shortage of liquidity. In 2013, the Basel Committee of Banking Supervion (BBS) responded to thebanks challenges by introducing the "Basel IlI, Liquidity Coverage Ratio (LCR)" as an indicator of the short-term resilience of a bank's liquidity risk profile. In 2015, the IFSB introduced an LCR tailored to the needs and nature of Islamic banks. The BCBS and IFSB proposed a plan for gradual minumum ratio compliance which started in 2015 at 60% and would increase annually by 10% to reach 100% in 2019. This research investigatesthe LCR future compliance challenge, in light of the shortage of Shariah compliant liquidity facilities, specifically, Shariah compliant short-term liquidity instruments To meet the research objective, BCBS and IFSB papers, related studies and practices were examined. This research started by studying the short-term liquidity instruments based on Shari'ah theory, then moved to the Shari'ah compliant liquidity facilities experienced in selected jurisdictions. Finally, it discussed the LCR as proposed by the BCBS and IFSB and eventually the findings were used to address the research problem. Overall, the research outcome indicates that Islamic banks are able to comply with the proposed future minimum CR of 100% threshold, a compliance which would be based on cash and reserves as the dominant component of HOLA. The other component of HQLA in terms of short term liquidity instruments were, however, considered inadequate due to their rarity in current practice. The research recommends some ways to improve future LCR compliance and suggests that the shortage of short term liquidity facilities should be developed by the regulatory authorities, multi development banks and other Islamic banking industry stakeholders, to secure the vital LCR compliance by Islamic banks in future. |
English
No. of Pages
132p.
Degree
M.Sc
Select type of work
Institution
CIS Program Old
CIS publications
No
CIS Thesis
Yes
CIS Library Call Number
Thesis QFIS IF 2016/6