The Effects of the Liquidity Problem on Islamic Banks

Abstract

This study aims to demonstrate the effects of the liquidity problem on Islamic banks. As it is
known, excess liquidity beyond the required limit leads to a number of problems for the bank,
especially with regard to the lack of optimal utilization of those resources, while the lack of
liquidity leads to the violation of the decisions of the supervisory authorities and the failure to
meet the needs of customers in addition to the inability to seize investment opportunities. The
study recommended that Islamic banks find effective mechanisms to control liquidity so that the
available resources are used without violating the requirements of the supervisory authorities and
clients.