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This paper considers the valuation of a vulnerable option when underlying stock is subject to liquidity risks. That is, it is assumed that the underlying stock is not perfectly liquid. We establish a framework where the stock price follows the stochastic volatility model and the option contains the default risk of the option issuer. In addition, we assume that liquidity risks are caused by stochastic market liquidity, and the default occurs at the first jump time of a stochastic Poisson process, which has a stochastic default intensity process consisting of both idiosyncratic and systematic components. By employing a change of measure, we derive an analytical formula for the value of a vulnerable option. Finally, we present several numerical examples to illustrate the sensitivity of significant parameters. [ABSTRACT FROM AUTHOR]

In recent years, investors' increasing focus on sustainable investments and the sustainability orientation of companies has led to parallel growth in the market for environmental, social and governance (ESG) performance and ESG rating agencies. However, even though ESG rating agencies have become very influential institutions, the literature has found that ESG performance ratings provided by different agencies often differ from each other. This causes consequences that should be considered, such as complex evaluation of companies' ESG performance and uncertainty in ESG investment decisions. Therefore, it is necessary to identify which determinants influence ESG performance. This study aims to identify the internal determinants of an ESG score using bank-specific balance sheet indicators such as capital and risk ratios. The analysis focuses on the European banking sector from 2018 to 2022. Banks mainly foster the transition to a more inclusive and sustainable economy. Moreover, after the recent financial crises, banks have increased their social responsibility practices, strengthening their credibility, trust and reputation. Generalised estimating equations with standard error robust to heteroscedasticity were used. The results reveal that the factors that most influence the ESG score provided by ESG rating agencies are bank size and liquidity risk exposure. The larger the size of the bank and the lower the exposure to liquidity risk, the higher the ESG score assigned. [ABSTRACT FROM AUTHOR]

Purpose: Proponents of Islamic banking believe that this banking model is relatively superior in times of financial crises. This study aims to examine whether Islamic banks were more resilient to the coronavirus 2019 (COVID-19) pandemic than their conventional peers, especially in terms of two of the most important banking risks, capital and liquidity risks. Design/methodology/approach: The authors use a regression model to examine whether Islamic banks were more resilient to the recent health crisis, as compared to their conventional counterparts. The results are robust to alternative crisis time periods, the use of different model specifications and the inclusion of different control variables. Findings: Unlike during the 2007–2008 global financial crisis (GFC), Islamic banks have not performed relatively well during the more recent crisis caused by the COVID-19 pandemic. The results show that Islamic banks experienced an increase in both capital and liquidity risks. The results also indicate a decrease in bank profitability, improved solvency and asset quality and a decrease in operational risk. Originality/value: This study contributes to the literature on banking business model and resilience to economic crises. Contrary to some expectations and to their performance during the GFC of 2007–2008, Islamic banks were found to be more vulnerable during the COVID-19 pandemic than conventional banks. [ABSTRACT FROM AUTHOR]

This study investigated the influence of digital payment systems on banks’ stability by exploring their effect on the Z-score of the Jordanian banking sector during the period from 2004 until 2022. It specifically focused on liquidity risks generated from e-payment transactions and how sufficient capital adequacy ratios enhance banking sector stability over both short-term and long-term periods by standing against sudden volatilities yielded from large amounts of transactions executed through digital payment systems. To achieve this objective, the study utilizes time series dual regression analyses of vector autoregression and vector error correction models on E-views 12 to cover the time variation influences of digital payment on the banking sector Z-score. The regression results indicate varied effects between the benefits and risks of digital payment systems on a bank’s Z-score that influence the immediate sector’s stability, indicating that while digital payment systems can initially hold liquidity risks, leading to short-term instability; the strategic implementation of robust capital adequacy ratio stands as a protective buffer by fostering long-term banking sector resilience. The results also suggest future predictions and insights for financial sector legislators and regulators emphasizing the need for monitoring strategies that stimulate continuous innovations in the digital payment infrastructure while constantly ensuring the stability and resilience of the banking sector. Thus, prudent liquidity management and the reinforcement of capital buffers are encouraged to pilot the dual challenges and opportunities that appeared at the stages of the digital payment process, ultimately guiding the sector toward continuous growth and sustainability. AcknowledgmentThe author is grateful to the Middle East University, Amman, Jordan for the financial support granted to cover the publication fee of this research.

This paper presents a method to identify causal interactions between two time series. The largest eigenvalue follows a Tracy-Widom distribution, derived from a Coulomb gas model. This defines causal interactions as the pushing and pulling of the gas, measurable by the variability of the largest eigenvalue's explanatory power. The hypothesis that this setup applies to time series interactions was validated, with causality inferred from time lags. The standard deviation of the largest eigenvalue's explanatory power in lagged correlation matrices indicated the probability of causal interaction between time series. Contrasting with traditional methods that rely on forecasting or window-based parametric controls, this approach offers a novel definition of causality based on dynamic monitoring of tail events. Experimental validation with controlled trials and historical data shows that this method outperforms Granger's causality test in detecting structural changes in time series. Applications to stock returns and financial market data show the indicator's predictive capabilities regarding average stock return and realized volatility. Further validation with brokerage data confirms its effectiveness in inferring causal relationships in liquidity flows, highlighting its potential for market and liquidity risk management.

Banking and risk are synonymous concepts. The risk concepts for both conventional and Islamic banks are broadly similar, and liquidity risk is among the most important risks that all banks are exposed to. The management process of liquidity risk, which arises when banks do not have enough assets to meet their liabilities at maturity, may differ in conventional and Islamic banks. This study aims to present a comparative analysis of the liquidity determinants of conventional and Islamic banks operating in Turkey. Using the data of 3 Islamic and 17 conventional banks for the period between 2011Q1-2022Q2, the analysis, which also aims to see the short and long-term effects, concludes that the determinants of liquidity risk for conventional and Islamic banks are largely similar. However, the liquidity of Islamic banks is more sensitive to bank-specific variables. The findings showed that Islamic banks, which cannot use all of the conventional liquidity management tools in the liquidity management process for different reasons, have to hold higher liquid assets than conventional banks in the short term, even if they are balanced in the long term.

Abstract This is a pioneering study that undertakes a comparative analysis assessing the annual intermediation efficiency of public versus private banks in Egypt. Moreover, liquidity risk is a major threat facing banks in their efforts to sustain financial stability. Thus, this study is the first to model the determinants of liquidity risk in public and private banks in Egypt while examining the impact of banks’ intermediation efficiencies on their liquidity risk levels. The study employs advanced nonparametric econometric approaches on a sample of Egyptian public and private banks from 2014 to 2022. The data envelopment analysis is used in estimating banks’ intermediation efficiency scores, while the quantile regression analysis is applied to examine the impact of bank intermediation efficiency on liquidity risk under different liquidity risk quantiles. The findings indicate that public banks show consistent superiority in terms of their financial intermediation efficiency levels compared to private banks. Moreover, the paper findings demonstrate the negative significant relationship between bank intermediation efficiency and liquidity risk while highlighting the higher significant positive impact of intermediation efficiency on reducing the liquidity risk of banks that are characterized by undertaking high liquidity risk levels. Furthermore, contrary to general assumptions, this study’s findings demonstrate that the significance of micro- and macro-level determinants of a bank’s liquidity risk is dependent on its prevailing liquidity risk level. Hence, the positive impact of equity capital, asset concentration, size, and growth in gross domestic product and the negative effect of asset quality on bank liquidity risk vary under banks’ different liquidity risk quantiles.

This study examines the relationship between risk management and performance based on the size of commercial banks in Tanzania. Specifically, the study aims to determine the effect of liquid asset/Total asset ratio on Return on asset (ROA). Data employed were extracted from audited financial statement report. The explanatory variables were liquid asset/Total asset ratio while the dependent variable was financial performance measured by return on asset. Panel data of 23 commercial banks for the period of five years (2017 to 2021) was employed. Fixed and random model was adopted in analyzing the data. Findings highlight that the impact of liquid asset/Total asset on performance varies among commercial banks, with large banks showing insignificant positive relationship, while medium and small banks exhibit weak but significant negative relationship. This implies that maintaining more liquid assets compared to total assets provides a certain level of risk management capability though it may lead to relatively small returns to small and medium commercial banks. As far as large banks are concerned the relationship does not lead low return Therefore, the study recommends that banks should establish optimal size of liquidity to maximize returns and invest excess liquidity in higher-yielding assets or where additional income can be generated without significantly increasing risk. Regulatory authorities may need to consider different liquidity risk management policies depending on the size of the bank, such as tailoring the policies to ensure that the proportion of liquid assets is appropriate and reflect size of the bank. Consequently, it may help small banks and medium avoid excessive liquid assets which can negatively impact their financial performance.

This is a pioneering study that undertakes a comparative analysis assessing the annual intermediation efficiency of public versus private banks in Egypt. Moreover, liquidity risk is a major threat facing banks in their efforts to sustain financial stability. Thus, this study is the first to model the determinants of liquidity risk in public and private banks in Egypt while examining the impact of banks' intermediation efficiencies on their liquidity risk levels. The study employs advanced nonparametric econometric approaches on a sample of Egyptian public and private banks from 2014 to 2022. The data envelopment analysis is used in estimating banks' intermediation efficiency scores, while the quantile regression analysis is applied to examine the impact of bank intermediation efficiency on liquidity risk under different liquidity risk quantiles. The findings indicate that public banks show consistent superiority in terms of their financial intermediation efficiency levels compared to private banks. Moreover, the paper findings demonstrate the negative significant relationship between bank intermediation efficiency and liquidity risk while highlighting the higher significant positive impact of intermediation efficiency on reducing the liquidity risk of banks that are characterized by undertaking high liquidity risk levels. Furthermore, contrary to general assumptions, this study's findings demonstrate that the significance of micro- and macro-level determinants of a bank's liquidity risk is dependent on its prevailing liquidity risk level. Hence, the positive impact of equity capital, asset concentration, size, and growth in gross domestic product and the negative effect of asset quality on bank liquidity risk vary under banks' different liquidity risk quantiles. [ABSTRACT FROM AUTHOR]

Maximising financial performance while maintaining adequate liquidity is a crucial and ongoing challenge for bank management, particularly in emerging markets. This study focuses on the relationship between capital structure and financial performance in Jordanian banks, with the mediating role of liquidity risk. Using panel data from 13 central Jordanian banks over the 2015–2022 period, we employ structural equation modelling (SEM) to analyse how capital structure ratios (equity-to-asset, debt-to-loan, and deposit-to-asset) influence financial performance metrics (return on assets and net income-to-expenditure ratio). Our findings reveal a significant positive association between capital structure and financial performance. However, liquidity risk fully mediates this effect. Capital structure primarily impacts performance by influencing a bank's liquidity risk profile. Furthermore, the strength of this mediating effect is noteworthy—capital structure exhibits a statistically more robust association with liquidity risk than its direct impact on performance. This highlights the crucial role of managing liquidity risk within the complex dynamics of bank operations. This research makes a significant contribution to the existing literature by demonstrating the positive impact of capital structure on performance using the underlying mechanism through which this effect occurs. The insights of this research provide several implications for practice in the context of banking industries. [ABSTRACT FROM AUTHOR]

Banking and risk are synonymous concepts. The risk concepts for both conventional and Islamic banks are broadly similar, and liquidity risk is among the most important risks that all banks are exposed to. The management process of liquidity risk, which arises when banks do not have enough assets to meet their liabilities at maturity, may differ in conventional and Islamic banks. This study aims to present a comparative analysis of the liquidity determinants of conventional and Islamic banks operating in Turkey. Using the data of 3 Islamic and 17 conventional banks for the period between 2011Q1-2022Q2, the analysis, which also aims to see the short and long-term effects, concludes that the determinants of liquidity risk for conventional and Islamic banks are largely similar. However, the liquidity of Islamic banks is more sensitive to bank-specific variables. The findings showed that Islamic banks, which cannot use all of the conventional liquidity management tools in the liquidity management process for different reasons, have to hold higher liquid assets than conventional banks in the short term, even if they are balanced in the long term. [ABSTRACT FROM AUTHOR]

The public's confidence in insurance companies has been damaged by state-owned insurance companies' inability to pay claims. The purpose of this research is to investigate how financial risk affects business performance and how hedge accounting mitigates that influence. This study uses a quantitative approach. The analysis makes use of secondary data from 2019 to 2022 from insurance firms' annual reports. Both moderated regression analysis (MRA) and multiple linear regression analysis are used in this investigation. The findings show that return on assets (ROA) is significantly and negatively impacted by credit risk. Return on assets is unaffected by market, insurance, liquidity, and operational risks. The MRA analysis demonstrates how hedge accounting can increase the impact of risk associated with credit and insurance returns on assets. Hedge accounting, however, has no effect on how much market, operational, and liquidity risk affect return on assets. [ABSTRACT FROM AUTHOR]

This study aims to analyze the level of accuracy of financial distress prediction models and to test the ability of liquidity risk ratio, credit risk and capital ratio in predicting the possibility of financial distress in rural banks (BPR) in Indonesia. The data used is sourced from secondary data and collected from BPR's financial statements published on the Financial Services Authority (OJK) website during the 2014-2023 period. The population in this study is all rural banks as many as 1,402 rural banks and the number of samples is 312 rural banks spread throughout Indonesia. Determination of samples by the Slovin method by proportionate stratified random sampling technique. The results of the study that the liquidity risk ratio, credit risk and capital ratio in predicting financial distress can be used with an accuracy rate of 95.90%. Liquidity risk ratio and credit risk ratio have a positive and significant effect, capital ratio and primary ratio have a negative and significant effect, while capital adequacy ratio has a positive and significant effect on the possibility of financial distress in rural banks in Indonesia. [ABSTRACT FROM AUTHOR]

How do capital controls and banking concentration affect economic development? This paper develops a general equilibrium model to study these important issues. To do so, we construct a framework with heterogeneous agents and imperfectly competitive financial intermediaries who help depositors manage liquidity risk. Importantly, higher levels of concentration raise the cost of domestic borrowing which increase the reliance on international capital markets. Finally, once the rate of money growth is sufficiently high, capital controls bind and the effects of monetary policy on capital formation are more pronounced. [ABSTRACT FROM AUTHOR]

This paper presents a method to identify causal interactions between two time series. The largest eigenvalue follows a Tracy-Widom distribution, derived from a Coulomb gas model. This defines causal interactions as the pushing and pulling of the gas, measurable by the variability of the largest eigenvalue's explanatory power. The hypothesis that this setup applies to time series interactions was validated, with causality inferred from time lags. The standard deviation of the largest eigenvalue's explanatory power in lagged correlation matrices indicated the probability of causal interaction between time series. Contrasting with traditional methods that rely on forecasting or window-based parametric controls, this approach offers a novel definition of causality based on dynamic monitoring of tail events. Experimental validation with controlled trials and historical data shows that this method outperforms Granger's causality test in detecting structural changes in time series. Applications to stock returns and financial market data show the indicator's predictive capabilities regarding average stock return and realized volatility. Further validation with brokerage data confirms its effectiveness in inferring causal relationships in liquidity flows, highlighting its potential for market and liquidity risk management. [ABSTRACT FROM AUTHOR]

This study examines the relationship between risk management and performance based on the size of commercial banks in Tanzania. Specifically, the study aims to determine the effect of liquid asset/Total asset ratio on Return on asset (ROA). Data employed were extracted from audited financial statement report. The explanatory variables were liquid asset/Total asset ratio while the dependent variable was financial performance measured by return on asset. Panel data of 23 commercial banks for the period of five years (2017 to 2021) was employed. Fixed and random model was adopted in analyzing the data. Findings highlight that the impact of liquid asset/Total asset on performance varies among commercial banks, with large banks showing insignificant positive relationship, while medium and small banks exhibit weak but significant negative relationship. This implies that maintaining more liquid assets compared to total assets provides a certain level of risk management capability though it may lead to relatively small returns to small and medium commercial banks. As far as large banks are concerned the relationship does not lead low return Therefore, the study recommends that banks should establish optimal size of liquidity to maximize returns and invest excess liquidity in higher-yielding assets or where additional income can be generated without significantly increasing risk. Regulatory authorities may need to consider different liquidity risk management policies depending on the size of the bank, such as tailoring the policies to ensure that the proportion of liquid assets is appropriate and reflect size of the bank. Consequently, it may help small banks and medium avoid excessive liquid assets which can negatively impact their financial performance. [ABSTRACT FROM AUTHOR]

In recent years, investors have increasingly focused on the environmental, social, and governance (ESG) performance of businesses, driven by the rising importance of social and environmental challenges. This trend highlights the critical role of ESG factors in the financial sector. This study leverages stakeholder theory, risk management theory, and ESG investment theory, utilising financial data and ESG scores from Chinese listed banks to comprehensively analyse ESG elements and examine their impact on the liquidity risk of commercial banks. The results show that: (1) Enhanced ESG performance can mitigate liquidity risk in commercial banks by reducing the proportion of non-performing loans and improving overall financial performance. (2) By standardising and implementing sustainable business practices, ESG elements can improve commercial banks' liquidity management levels and lessen the incidence and effects of liquidity risk. As a result, it is critical to lower banks' liquidity risk and support the long-term growth of commercial banks from five angles: information disclosure, differentiated reform, digital transformation, education and training, and international cooperation. [ABSTRACT FROM AUTHOR]

This paper develops a rigorous model to analyse the market impact of liquidation. Invoking innovative techniques from agent-based simulation, we construct the order book's reaction function to liquidation. A methodology is then developed for establishing the optimal close-out strategy which balances the velocity of positional liquidation with that consequential market reaction function. This model can be used in parallel to more traditional calculations of market volatility to ensure that the overall risk capitalisation of a central clearing counterparty remains robust. In the case of financial markets, agent-based models often seek to account for the so-called stylised facts of financial markets. Stylised facts are simply empirical regularities that appear to be stable across markets and over time. Such facts range from statistical concepts, such as the distribution of returns, to more abstract notions such as stock market bubbles and crashes. [ABSTRACT FROM AUTHOR]

This study examines the balance sheet management governance operating model of selected failed banks from 2007, 2008, 2009 and 2023, with emphasis on the corporate governance structure in place and the position of the asset-liability committee (ALCO), and draws conclusions and recommendations for future policy. All failed sample banks exhibited near-identical governance frameworks for management and oversight of balance sheet risk: namely an ALCO that reported to the senior executive management committee, and was at least two levels, if not three levels, below board level. It is inferred that, as the ultimate responsible and accountable forum for ensuring balance sheet viability and continuing going concern of the bank, the board would benefit from being closer to the balance sheet risk management process. This implies changing the governance structure such that the ALCO is closer to the board itself, and able to provide direct comfort to the board that the bank's capital and liquidity risks are being managed appropriately. The following bank governance measures are recommended, to be imposed by regulatory fiat if necessary: • Direct delegated authority of the ALCO to manage the balance sheet, from a long-term robustness and viability perspective, directly on behalf of the board. • The ALCO to report directly to the board, rather than via the executive management committee (or as an alternative approach, changed to become a sub-committee of the board). This recognises that the asset-liability management (ALM) discipline is at least as important as, if not more important than, the 'audit' oversight function undertaken by the board audit committee. • Technical expertise at ALCO and board level that is capable of discerning the genuine capital and liquidity risk exposure position of the bank, on a medium-term forward-looking basis, at all times. [ABSTRACT FROM AUTHOR]

Abstract This study examines whether the type of financial structure in the GCC influences the relationship between liquidity risk and banks’ performance from 2007 to 2021. By employing fixed effects and fully modified ordinary least squares (FMOLS), we find that the impact of liquidity risk on bank profitability differs among bank-based and market-based systems. Specifically, the results show that the profitability of banks operating in bank-based countries is positively influenced by the liquidity risk compared to their counterparts. The study also demonstrates that the global financial crisis increases banks’ profitability in the bank-based financial system. Furthermore, the results show that gross domestic product growth (GDPG) determines banks’ financial profitability in the banks-based market. This study offers some important implications for policymakers to consider the type of financial system to stimulate bank stability.

AbstractThe paper examines how liquidity risk affects the Middle East and North Africa (MENA) bank profitability. Banks need profitability to survive, but liquidity risk measures long-term company health. Through Refinitiv Eikon, quantitative data was collected over 11 years from 2012 to 2022 for 71 MENA banks to support the theoretical study. Return on Equity (ROE), a profitability indicator, is the dependent variable, whereas liquidity risk is the independent variable and controlling for size, loan quality, inflation, gross domestic product, income diversification, operational efficiency, capital adequacy, and growth. This study estimates the impact of liquidity risk on MENA bank profitability using OLS and panel regression (fixed and random effects). Several results were found, such as that bank size, operational efficiency, and non-performing loans negatively affect profitability, suggesting that large banks have higher operating costs and may weaken profitability in MENA. Besides, additional non-performing loans increase the bank’s costs and thus diminish profitability. Also, if the bank has no control over the operational expenses, then this will lead to reduce profitability. Liquidity risk, capital adequacy, income diversification, and growth have a positive significant impact on ROE implying that banks with higher growth opportunities, better capital adequacy ratio, more income sources, and liquidity risk will result in higher profitability as explained by the risk-reward theory. The results are robust and this has been confirmed by applying the Generalized Method of Moments (GMM).

This study examines whether the type of financial structure in the GCC influences the relationship between liquidity risk and banks' performance from 2007 to 2021. By employing fixed effects and fully modified ordinary least squares (FMOLS), we find that the impact of liquidity risk on bank profitability differs among bank-based and market-based systems. Specifically, the results show that the profitability of banks operating in bank-based countries is positively influenced by the liquidity risk compared to their counterparts. The study also demonstrates that the global financial crisis increases banks' profitability in the bank-based financial system. Furthermore, the results show that gross domestic product growth (GDPG) determines banks' financial profitability in the banks-based market. This study offers some important implications for policymakers to consider the type of financial system to stimulate bank stability. [ABSTRACT FROM AUTHOR]

The policies used by governments in emerging and developing economies during the financial transition have always faced the question of what impact the central bank's interventionist monetary and currency policies have had on banks' risk-taking. In this research, the impact of monetary and foreign exchange policy on the risk-taking of commercial banks was investigated, and in this way, a sample consisting of 15 stock-exchange banks from 1386 to 1400 was investigated using the quintile regression method and the state space method. The estimation results showed that monetary and currency policies have a positive relationship with liquidity risk. In addition, the findings showed that with the beginning of sanctions, the liquidity risk of banks has increased and the impact of monetary and currency policies on larger banks has increased. Therefore, small banks are less likely to go bankrupt compared to large banks. [ABSTRACT FROM AUTHOR]

Copyright of Latin American Journal of Economic Developement (LAJED) is the property of Universidad Catolica Boliviana San Pablo and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

The recent asset pricing evidence on the return-liquidity risk relationship is mixed and somewhat ambiguous. We reevaluate the importance of market-wide liquidity and liquidity risk for equity pricing by taking the role of investor sentiment into account. Regarding the market-wide liquidity level as a systematic factor, we find that high market sentiment tends to weaken the effect of market-wide illiquidity - both expected and unexpected - on stocks returns. With respect to systematic liquidity exposure as a priced risk factor, the results show that the effect of exposure to shocks in aggregate liquidity on expected returns is significantly positive when sentiment is low, while it is significantly negative when sentiment is high suggesting that "rational" asset pricing is only valid in the low sentiment regime without too much turbulence caused by sentiment traders. [ABSTRACT FROM AUTHOR]

Copyright of Journal of Research in Humanities is the property of Tarbiat Modares University Press and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Liquidity risk was at the heart of 2007–2008 global financial crisis, which has led to a series of financial institutions failure. We test whether and how liquidity risk impacts European banks' stability (i.e., a bank risk-return profile) under different levels of engagement in non-traditional banking activities after the global financial crisis and during the implementation of the Basel III liquidity rules. To calculate financial stability, we adopt an efficiency perspective based on the combination of the CAMELS rating system with the data envelopment analysis technique. We implement a nonlinear panel smooth transition regression approach, where transitional factors of income diversification are endogenously captured from the data. We find that, liquidity risk stemming from liquidity creation has a positive impact on bank stability, implying that income diversification can serve as a "buffer" through which banks can ensure their liquidity creation and offset for the compression of intermediation margin in lending and deposit activities. This suggests that diversification does not impede the ability of banks to operate with lower liquidity holdings but allows them to make greater use of their balance sheets to fulfill their primary roles of credit provision and liquidity creation. The results offer interesting implications for regulators and bank managers in managing liquidity risk. [ABSTRACT FROM AUTHOR]

This Research aims to analyze the risk of internal influence and market risk ofinancial performance. Furthermore, examining the effect of credit risk, operational risk, liquidity risk, market risk, age dan size on financial performance. The data used in this study is data from insurance companies listed on the Indonesia Stock Exchange for 2017 - 2021. The research sample was selected using the purposive sampling method in order to obtain 9 insurance companies as samples. The data analysis used to test the hypothesis is panel data regression analysis using the Eviews 10 program. The results of the study show that credit risk and market risk have no effect on financial performance. However, on Operational Risk, Liquidity Risk and the magnitude of the positive influence on financial performance. However, Age found an influence on financial performance. Specifically, the research results show that credit risk has no effect on financial performance. The results also show that market risk management has no effect on financial performance. This finding implies that good investment decisions result in increased investment income, which in turn improves financial performance. Insurance companies must ensure proper [ABSTRACT FROM AUTHOR]

Sharia Commercial Banks in Indonesia are experiencing rapid growth, as can be seen from the significant increase in sharia banking assets. As a result, Sharia Commercial Banks need to ensure bank liquidity is well maintained. This research evaluates the influence of liquidity and macroeconomic factors on the profitability of Sharia Commercial Banks. This research uses quarterly financial report data from 13 Sharia Commercial Banks during the 2018-2022 period. Sampling technique that used in this research was purposive sampling. The analysis method used is panel data regression. The research results show that the LATA and INF variables have a significant positive influence on ROA, while the CUR variable has a significant negative influence on ROA. Meanwhile, the LATD, FDR and GDP variables do not have a significant influence on ROA. Keywords: Sharia Commercial Banks; Liquidity Risk; Macroeconomics; Bank Profitability

This study examines whether digital transformation reduces banks' risk-taking in the Vietnamese commercial banking sector. Our research sheds light on how banks' digital transformation affects their risks, specifically regarding credit, insolvency, and liquidity. The study utilizes the readiness index for the Vietnamese commercial banks' Information and Communication Technology (ICT) Index, which the Vietnamese government has officially constructed. The OLS, PCSE, and FGLS models are employed to analyze how digital transformation reduces banks' risk-taking based on the longitudinal data from 26 commercial banks in Vietnam from 2013 to 2022. The results indicate that digital transformation significantly reduces credit risk by improving risk management capacity and reducing asymmetric information. It also helps mitigate insolvency risk by lowering costs and increasing profitability. However, digitalization does not significantly impact liquidity risk as digital channels leverage banks' lending and deposit activities. This research provides empirical evidence on the role of bank digitalization in risk-taking and concludes with recommendations for developing bank digital transformation in Vietnam and other developing countries, including suggestions for further research in this area.

Risk management has emerged as a critical element across several economic sectors, with particular significance in the banking industry. The governing bodies of these industries encounter a multitude of threats stemming from the escalation of an unpredictable economic environment the intricacy of transactions and big data, and several other concealed factors. The primary aim of the present research is to investigate the impact of certain financial risks, including capital risk, liquidity risk, and operational risk, on the financial performance of both commercial and Islamic banks operating within the banking sector of the United Arab Emirates. The study will focus on the time frame spanning from 2015 to 2022. The data used in this study was sou reed from the annual reports of banks, which were acquired from the official websites of the Abu Dhabi Securities Exchange and the Dubai stock market. The most prevalent indicators used to assess a bank's financial performance are Return on Assets (ROA) and Return on Equity (ROE). In contrast the financial risk metrics included three distinct categories of risk: capital risk, liquidity risk, and operational risk. The findings indicate that there is a statistically significant positive relationship between capital risk and both return on assets (ROA) and return on equity (ROE). However, it was observed that neither liquidity risk nor operational risk had a statistically significant impact on either of the financial performance metrics. Moreover, the size of a bank has a notable and favorable impact on both return on assets (ROA) and return on equity (ROE). The ramifications of the study's conclusions have significant importance for regulators, bank management and investors. I Policymakers need to prioritize the enhancement of the regulatory framework pertaining to caboutements in order to the financial stability of banks. Bank managers should give priority to the management of capital risk and the size of the bank in order to their financial performance. In order to optimize profits, it is important for investors to carefully evaluate and take into account the many risk considerations associated with their investment selections. JEL: G20, G21 [ABSTRACT FROM AUTHOR]

This paper explores the distinctive characteristics of liquidity risk faced by Islamic banks as well as the typical challenges and constraints faced by these institutions; it also examines the strategies employed by these institutions to effectively manage and mitigate such risks. The inclusion of a literature review of most cited articles on the subject provides a summary of key studies and research conducted in the field of liquidity risk management in Islamic banking. It aims to cover various aspects of liquidity risk management in Islamic banks, including risk identification, measurement, mitigation strategies, governance, interbank relationships regulatory considerations, and the role of Shariah compliance. It offers both researchers and practitioners seeking comprehensive knowledge on the subject an overview of the existing body of knowledge, enabling them to understand the current state of research and build upon existing insights. By offering a comprehensive coverage of current information and practical strategies available in the literature, this paper aims to add significant value to the understanding and implementation of liquidity risk management in Islamic banks. We mean for it to serve as a valuable resource for researchers, practitioners, regulators, and stakeholders involved in Islamic finance and risk management. By stressing the persistent need for effective liquidity risk strategies in the Islamic banking sector and offering insights into the application of liquidity risk management practices that align with Islamic finance principles, we attempt to address a gap in the existing literature that could constitute the basis for future research perspectives. [ABSTRACT FROM AUTHOR]