The Impact of liquidity risk management on Financial Performance through Profitability in the UAE Islamic banks: A review

Abstract

The purpose of this study is the impact of liquidity risk management for Financial Performance through Profitability in the UAE Islamic banks. The study provides insights for policymakers and practitioners to choose appropriate liquidity management procedures to Islamic banks in the UAE, which can eventually enable them to support their liquidity management policies, in a way that would expand their customer base according to profitability aspects, and not only religious ones. also is the first study that investigates the determinants of Liquidity Management Islamic banks in the UAE. The study finds that liquidity risk management have positive and significant effect on financial performance. It therefore recommends that banks in UAE should establish sound governance and risk management systems by developing strategies, policies for liquidity management that is well integrated into its risk management practices as well as establish a contingency funding plan to address any liquidity shortfall during periods of stress or emergency while ensuring that active monitoring liquidity funding needs to avert any liquidity challenge that could trigger crisis in the banks is promptly addressed.