Purpose - This paper aims to critically investigate the liquidity risk management of Islamic banks and develop an alternative regulatory framework appropriate for liquidity management of these banks. Design/methodology/approach - The specific risk profile of an Islamic bank requires developing a...

How has Basel III (Bank for International Settlements), regarding the computation, measurement, and management of the liquidity coverage ratio (LCR), vitalized the Islamic banking sector in emerging economies? Vice versa, what is the Islamic banking sector's capacity to respond in embracing...

Capital buffer is the excess of capital that banks have above the legally prescribed minimum and has a very important role for preserving the stability of the banking sector, especially in economies where banks are the main source of funding. The capital buffer of banks is very important to...

Inspired by the extensive criticisms against the textbook fractional reserve theory, this paper revisits the mechanics of money creation process and complements the traditional focus on the reserve requirement by elaborating on the roles of three prudential regulations proposed in the Basel III...

We present a stochastic simulation forecasting model for stress testing that is aimed at assessing banks’ capital adequacy, financial fragility, and probability of default. The paper provides a theoretical presentation of the methodology and the essential features of the forecasting model on...

The recent global financial crisis (GFC) of 2007-2008 revealed several critical shortcomings in the existing Basel II international banking supervisory framework. The Basel Committee adopted a set of reform measures inclusive of additional solvency and liquidity rules, known as "Basel III"....