Research Proposal

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  • Topic: Scientific method, Risk management, Islamic banking
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Running Head: RESEARCH PROPOSAL

Liquidity Risk Management: Islamic Banks

Table of contents
Abstract.................................................................................................................................3 Introduction.......................................................................................................................... 4 Literature Review.................................................................................................................. 5 Research methodology........................................................................................................... 6 Finding and Analysis.............................................................................................................. 7 Conclusion and Recommendations......................................................................................... 8 References.............................................................................................................................. 9

Abstract
Background: This research proposal is about liquidity risk management in Islamic banks. In order to do the research on given topic, all aspects of liquidity risk in Islamic banks will be covered. In addition to this, the management of liquidity risk in Islamic banks will be discussed in the research paper. The importance of liquidity risk management and how it can affect the banking operations will be analyzed with the help of literature review. In literature review method, views of authors regarding liquidity risk management will be analyzed. Aim and Research Question : The aim of this research proposal is to discuss the importance of liquidity risk management. The focus will be given on the liquidity risk management in Islamic banking. It is essential to define specific research problem for developing a systematic approach of the research. In relation to this, research work is based on the question “ What is liquidity risk management and why is it important for Islamic banking” ? It will be helpful in developing a properly defined framework for the research study. In this regard, research will be focused on liquidity risk in Islamic banking. Various factors that can increase the liquidity risk in Islamic banking will be covered in the research work. Apart from this various measures that should be followed by Islamic banks to reduce or avoid liquidity risk will be discussed in the research paper. In order to complete the research work , literature review method will be used. At the end of paper, recommendations will be given to Islamic banks for liquidity risk management.

Introduction
Liquidity risk occurs when there are chances of financial loss for a firm due to the lack of cash to meet the requirements of borrowers and depositors. Liquidity risk can also be described as inability of a financial firm to meet the financial demands of its customers due to the lack of cash inflows. Any financial organization or government can lose liquidity if its associates or partner firms refuse to trade or lend money to them due to fall in their credit rating or in case they experience unexpected cash flows. The financial firms also face liquidity risk in case the market in which they are operating experience liquidity risk (Matz & Neu, 2007).

Further, liquidity risk also brings some other risks to organizations, like market risk and compound risk. As liquidity risk also brings other risks along with it, it is difficult to isolate liquidity risk. However, liquidity risk management helps in making sure that financial firms have sufficient amount of internal cash to continue its normal day to day operations. In this research proposal, liquidity risk management in Islamic banks will also be discussed (Institute of Islamic banking and insurance, 2010). Research Aim and Objectives

In order to discuss the research problem defined above, specific aims and objectives are identified, which need to be...
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