Liquidity Risk Management in Islamic and Conventional Banks A Comparative Study between Al Yaqeen Bank and Jumhouria Bank for the Period (2019–2023)

Abstract

This study aims to analyze the differences in liquidity management and resource allocation policies between Al-Yaqin Bank and Al-Jumhouria Bank during the period (2019–2023), using key financial ratios. The findings reveal that Al-Yaqin Bank consistently maintained excessively high liquidity levels exceeding 80% of total assets, with almost no lending activity, as the loans-to-deposits ratio remained below 1%. This indicates an overly conservative strategy and underutilization of resources for generating returns. In contrast, Al-Jumhouria Bank pursued a more balanced approach, maintaining liquidity levels between 64% and 72%, while allocating 21–28% of deposits to loans, reflecting its active role as a commercial bank. The study also highlighted non-significant differences in current assets-to-deposits ratios between the two banks. Accordingly, the study concludes with recommendations for Al-Yaqin Bank to activate its lending operations and diversify investments, while encouraging Al-Jumhouria Bank to further expand its investments under robust risk management. Additionally, the study emphasizes the need for regulatory policies by the Central Bank to ensure an optimal balance between liquidity and profitability.