Social Sciences
4 years ago

Bank liquidity fails to boost profits, efficiency and NPF key.

RELEVANCE Journal of Management and Business
The Moderating Role of Capital Adequacy in the Effect of Liquidity on the Profitability of Islamic Banking
Rury Diwira Registanaranti Yastika, Maria Rio Rita, Imanuel Madea Sakti

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The study looked at how the amount of money a bank has on hand (liquidity) affects its profitability, with a focus on Islamic banks in Indonesia. They also examined how having enough capital (capital adequacy) influences this relationship. The researchers analyzed data from 14 Islamic banks over a three-year period. The results showed that having more money on hand did not necessarily lead to higher profits for the banks. Additionally, having enough capital did not seem to change the impact of liquidity on profitability. Instead, factors like operational efficiency and problematic loans were found to be more important in determining bank profitability.