The effect of sukuk and liquidity risk on the ratio of Islamic banking capital to the application of the generalized system torque (GMM) approach

The present article examines the effect of sukuk and liquidity risk on the ratio of Islamic banking capital to the generalized exchange period for selected stock exchange banks during the period 2012-2018 by using the generalized system torque approach. The results of the study show a positive relationship between sukuk market, bank size, and liquidity ratio of facilities to assets, business cycles, gross domestic product and capital. The results also show the negative impact of risk and inflation control variables with the capital index. In other words, increases in sukuk, bank size, liquidity, facility-to-asset ratio, business cycles, gross domestic product lead to an increase in bank capital, and an increase in risk growth and inflation leads to a decrease in bank capital. The issuance of sukuk can help strengthen the bank's capital shield, and especially for Islamic banks that want to operate internationally, the issuance of sukuk, along with other capital instruments, will meet the capital requirements and greater ability of the bank to absorption of losses. The use of sukuk due to their different characteristics in terms of risk and return can be suitable for investors with various degrees of risk-taking. Therefore, along with using other financial instruments to attract resources, Islamic Bank can also design and supply different types of sukuk according to the tastes of its customers.

Keywords:

Sukuk , liquidity risk , capital ratio , generalized systemic torque approach