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Assessment of liquiditymanagement in Islamic banking
industryRifki Ismal
Faculty of Economics, University of Indonesia, Depok, Indonesia
Abstract
Purpose The purpose of this paper is to assess liquidity risk management (LRM) practices inIndonesian Islamic banking industry during the period 2000-2007.
Design/methodology/approach The paper constructs the LRM index (100 scale) which iscomposed of individual index of asset side; liability side; LRM policies; and the overall LRM index.
Findings The index produces a good grade for the liquidity management practices in the
Indonesian Islamic banking industry, represented by three Islamic banks which capture 82 percent ofthe total market share of the industry. However, the breakdown of the index of every Islamic banksuggests various achievements.
Research limitations/implications It is found that the practices of LRM are not optimal yetbased on some considerations explained in this paper. Further progressive actions have to be taken bythe regulators and all industrys players to improve the LRM practices.
Originality/value To the best of the authors knowledge, this is the first paper trying to assesshow good the LRM in Indonesian Islamic banking is.
KeywordsLiquid assets, Risk management, Banks, Banking, Liquidity, Islam, Indonesia
Paper typeResearch paper
1. BackgroundThe concept of liquidity in finance lays in two areas:
(1) the liquidity of financial instruments in financial market; and
(2) the liquidity related to solvency of a financial institution.
The former deals with a liquid financial market; smooth transactions, no financialbarriers, etc. The latter deals with the obligation of a bank to make payments to the thirdparty or simply the solvency of the bank (Fiedler, 2000, p. 442). This paper analyzes thelatter especially focusing on the liquidity management in the Islamic banking takinginto account Indonesian Islamic banking industry as a case study. By constructing ameasurable liquidity management index[1], it tries to value the Indonesian Islamicbanking performance on managing liquidity.
In the practice, one of the ultimate objectives of liquidity management is maintainingasset-liability balances. Hence, it manages funding and financing activities; forecasts ofdemand of funding and financing; and maintains sufficient capacity (reserves) to fulfillfinancial obligations with the third parties. Under the global and open economiccondition, the task to build a proper liquidity management becomes very imperative andchallenging, unexceptionally for Islamic banks as new players in the banking industry.Actually, Islamic banks have unique characteristics of banking operations because inprinciple they have to comply with sharia principles. As such, setting up a liquidity
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International Journal of Islamic and
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pp. 147-167
q Emerald Group Publishing Limited
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DOI 10.1108/17538391011054381
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management mechanism in this financial institution requires extra efforts and specialattention. For example, dissimilar with the conventional banks which often disconnectthe performance of financial and real sector, liquidity risk in Islamic banks might arisewhen business (real sector) is in downturn causing a failure to conduct a proper liquidity
management (a balance asset and liability).
2. Liquidity risk problem in sharia perspectivePrincipally, Islamic banking efforts that aim to provide a sound liquidity managementare conducted throughout the real business transactions (Antonio, 1999, pp. 46-53).It is because Islamic bank ties every financing contract with real asset which is typicallya unique attribute of the Islamic banks compared with the conventional one (Kahf, 2000,p. 2). Therefore, in its operation, Islamic banks consider business life cycle, cooperationamong business partners, and good conduct of the stakeholders. Thus, liquidity risk, if itoccurs, comes from disharmony of all business partners or unfavorable businesscondition (economic downturn/crisis) leading to liquidity problem as mentioned before.
All of these characterize the operation of Islamic banking industry in particular whendealing with liquidity risk.Moreover, Islamic banking takes roles as financial intermediaries, supporter and
facilitator all together. Even, they position themselves as a trusted body for theinvestors and business partners by becoming business partner, advisor, consultantand source of information. As such, as they are fully responsible to provide liquiditywhen demanded by the third party, Islamic banks manage liquidity demanded throughcoordination with all the counterparties. Hence, the liquidity management in Islamicbanking is done based on trust, belief and support of each other, share the risk and itbecomes forbidden to defeat other parties (Ministry of Religion, Republic of Indonesia,2005, 26, pp. 180-3).
3. Construction of liquidity risk management indexTheoretically, the sound liquidity risk management (LRM) can be observed at least fromanalyzing the performance of the balance sheet (asset and liability side) and the LRMpolicies (Antonio, 1999, p. 46). Thus, referring to that, the paper analyzes the:
. asset side;
. liability side; and
. liquidity management policy of Islamic banks.
On the asset side, the evaluation of LRM takes into account Islamic banks efforts tomonitor the financing; arrange proper financing allocation; tackle financing default andunpleasant economic condition; and handle liquidity shortages.
On the liability side, the evaluation focuses on the banks efforts to set up anappropriate proportion of the funds; to build a good arrangement/communication withdepositors regarding their liquidity withdrawal behaviors; and to trace the potential ofliquidity run. Whilst, the evaluation on LRM policies captures mainly the corporatepolicies to build a healthy liquidity management practices such as corporate policies intreating Islamic securities to ratify liquidity demanded; relation with other banks inIslamic interbank money market; relation with the central bank and governmentregarding placement of liquidity, etc.
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Finally, the construction of the LRM index involves the distribution of the 100-pointindex to the asset side, liability side and LRM policy, applicable for Indonesian case.Assuming that the Islamic banking policies related to asset side (A) and liability side (B)are equally important, each of them is given 35 points. The LRM policy which is
related to external factor (non-operational) (C) is given the allocation of 30 points. Hence,total index (L) is an accumulation of all points orL A BC, withA 35 points,B 35 points and C 30 points such that:
LXn
t1
AiXn
t1
BiXn
t1
Ci 1
Further, the index quota in every aspect being investigated (AintoC) is then separatedinto some set of individual questions which contain index point(s) to detect banksactions on mitigating and preventing liquidity risk in detail. All of the questions are asdepicted briefly in Appendix 1, Tables AI-AIII in the last part of the paper.
In addition, in the process of constructing the LRM index, it involves three different
styles of questions with the different treatment of index point(s). First of all is yes and noquestion (m) and for this, points are given to every single answers marking yes or no.There is always zero point value in every yes/no question. The second one is multiplechoice questions (n) which have points in each option of the question. There is no zeropoint value in this type because each answer is appreciated and given a point(s). Finally,ranking (priority) questions (p). For this style, there is a standard (ideal practices)ranking of answers based on sharia perspective (Ismal, 2007, pp. 5-20) in order to gainpoint(s) and also there is no zero point unless the answer does not match the standardranking. Then, continuing from the equation (1) above, the detail formula of every aspect(asset, liability, LRM policy) is written as:
Xn
t1 AiX
9
t1 miX
22
t1 pi 2
Xn
t1
BiX7
t1
miX14
t1
niX3
t1
pi 3
Xn
t1
CiX13
t1
miX3
t1
niX12
t1
pi 4
Upon examining Islamic banks X, Y, and Z with the proposed index calculation, theoutput will produce three index values of every Islamic bank, which are:
(1) index value of its asset (A);
(2) liability (B); and
(3) LRM policies (C).
Finally, in order to evaluate and judge the achievement of every aspect as well as theoverall index achievements, four criteria of examination are determined:
(1) excellent;
(2) good;
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(3) satisfactory; and
(4) poor.
The determination of interval value of the index for every criterion just adopts 25 percent
range from 0 (the lowest value) to 100 (the highest value) for overall index and 25 percentrange begins from the highest value for every aspect. Table I below writes the completeinterval value and all indexes as a whole.
Based on this grading system, the Indonesian Islamic banking industry is gradedexcellent if its total LRM index lies between 75 and 100; good if between 50 and 74;satisfactory if between 25 and 49; and poor if below 25. However, grading system andpoints in every assessment are subjective by the author. The regulators, banks can comeup with their owned value judgment for the result of the assessment.
4. Assessing Indonesian Islamic banking industryThe Indonesian Islamic banking industry[2] has been growing promisingly since theestablishment of the first Islamic bank in 1992. Peoples awareness to employ Islamicbanking spurred by government and Indonesian Moslem Scholars Council has made theindustry meaningful. Up to end of 2007, there are three Islamic commercial banks (BUS)namely Bank Muamalat Indonesia, Bank Syariah Mandiri and Bank Syariah MegaIndonesia followed by 25 Islamic banking units (UUS) and 114 Islamic rural banks(BPRS) integrating 683 offices around the country (Table II).
In its development, Islamic banks have been showing a healthy financialintermediary and prudential banking operation shown by the banking performanceindicators. For example, financing to deposit ratio has been lying between 100 and120 percent annually since 2001 while in conventional bank it is around 60 percent andnon-performing financing (NPF) positions between 2 and 4 percent while conventionalrecords higher position at 8 percent. Others, like total asset, financing and deposit have
GradingAssessment Total points Excellent Good Satisfactory Poor
Asset side 35 26-35 17-25 8-16 below 8Liability side 35 26-35 17-25 8-16 below 8LRM policies 30 22-30 15-21 7-14 below 7Total index 100 75-100 50-74 25-49 below 25
Table I.Grading system of theLRM index
Banking indicators 2000 2001 2002 2003 2004 2005 2006 2007
Islamic banks (unit) 2 2 2 2 3 3 3 3Islamic banking units (unit) 3 3 6 8 15 19 20 25Islamic rural banks (unit) 79 81 83 84 88 92 105 114Total offices (unit) 146 182 229 337 443 550 567 683Total asset (trillion Rp) 1.79 2.72 4.05 7.86 15.33 20.88 26.72 36.53Total financing (trillion Rp) 1.27 2.05 3.28 5.53 11.49 15.23 19.53 27.94Total deposit (trillion Rp) 1.03 1.81 2.92 5.72 11.86 15.58 20.67 25.65
Source:BI
Table II.Selected Islamic bankingindicators
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been growing annually for more than 60 percent on average[3]. Lately, total asset hasbeen reaching Rp36.53 trillion with total financing of Rp27.9 trillion, well above its totaldeposit of Rp25.65 trillion.
Despite the promising achievement above, the share of the industry in the total
banking industry is still very small. Total asset caters less than 2 percent of the totalasset of banking industry although it grows on average around 60-80 percentannually[4]. Less competitive, positioning of banks in peoples mind and lack of synergywith other financial institutions are some weakness of the industry (Bank Indonesia (BI),2005, pp. 18-22). Most importantly, some fundamental problems leading to liquidity riskchallenge this industry especially investment motivation of depositors; under developedIslamic financial market; limited Islamic banking instruments; the fragility of theIslamic banking industry towards macroeconomics issues, etc. (Ismal, 2008b, pp. 9-12).
As LRM is one important factor determining the successfulness of the IndonesianIslamic banking industry, there is a need to evaluate and value the practices of LRM inthe industry. The assessment takes all (three) Islamic banks as they dominate theindustry with 82 percent market share, much higher than UUS or BPRS (BI, 2002-2007).
Hopefully, this assessment of LRM would benefit the industry by, amongst others,examining the prospects of the industry and measuring the sensitivity of the industryagainst any issue on liquidity risk. The construction of LRM index itself usesinformation from LRM survey filled out by respondents from banking authority (as thesupervisor of the Islamic banks) and market players (Islamic bankers). Finally, in orderto maintain anonymity, the three Islamic banks are named as Islamic banks X, Y, and Z,without any correlation with the sequence of the way the three Islamic banks beingwritten previously.
Liability sideAssessment of the LRM from the liability side of the three Islamic banks has found that
around 50 percent of their total deposits is a rolled over one-month deposits owned bynon-individuals (mostly government institutions). Nevertheless, non-individuals areusually very cooperative and communicative with Islamic banks. Therefore, althoughthe domination of short-term deposits ever worries the banks especially from thosewhose behaviors cannot be predicted (rational individual depositors) but due to a charge(penalty) granted to any liquidation of immature deposits and a requirement for bigdepositors to give prior notice before withdrawing the funds, Islamic banks can so farsort out any short-term liquidity demanded from depositors.
For their future funding arrangement on the liability side, some of them plan todesign new banking instruments which fit the demand and expectation of depositors.The other prefers to attract international investor to invest money in the bank in order tostrengthen its capital or try to realign tenor of deposits from short-term into long-term
deposits.Meanwhile, the purpose of depositors to take their money out of the banks is mostly
driven by daily transaction motive and no indication of huge deposit switching fromIslamic bank into conventional bank. Small fraction only happens if interest rate returnoffered by conventional deposit is increasing. These under controlled and predictedliquidity withdrawals have supported Islamic banks to manage their liquidity.
Considering the above factors, the three Islamic banks get different marks on theliability side index. Bank X gets an excellent grade, Bank Y records a good grade and
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Bank Z achieves a satisfactory grade as depicted in Tables III-V, respectively.Fortunately, none of them falls into poor criterion. And, due to the inter relation betweenliability and asset side, these achievements should positively contribute to theperformance of the asset side and finally the overall grade index of the industry.
Nevertheless, because only one Islamic bank stands in an excellent grade, it showsthat LRM from the liability side does not achieve an optimal result yet. Furtheranticipative actions on liability side such as intensive education on Islamic banking tothe public, product development, etc. have to be implemented to improve the overallposition of the industry. Particularly in the future, when the share and contribution ofIslamic banks become more significant than what have been reached nowadays, theneed to have a perfect achievement on the liability side is a must. Appendix 2,Tables AIV-AVI informs detail index calculation of every Islamic bank on liability side.
Asset sideOn asset side, all three Islamic banks have done many efforts to tackle such risk. First ofall, they conduct intensive monitoring and evaluation of the Islamic financing contracts.
Even, they match financing plan with total available deposits by polling and releasingthe funds based on the maturity date. However, macroeconomics shocks seem theirultimate enemy because Islamic banking operates based on real sector performance asmentioned previously so that any unpleasant economic condition might potentiallycause direct impact to the banks. One important impact related to managing liquidity on
GradingAssessment of Bank X Total points Excellent Good Satisfactory Poor
Asset side 22 26-35 17-25 8-16 below 8Liability side 26 26-35 17-25 8-16 below 8LRM policies 22 22-30 15-21 7-14 below 7Total index 70 75-100 50-74 25-49 below 25
Table III.LRM index for IslamicBank X
GradingAssessment of Bank Y Total points Excellent Good Satisfactory Poor
Asset side 22 26-35 17-25 8-16 below 8Liability side 22 26-35 17-25 8-16 below 8LRM policies 23 22-30 15-21 7-14 below 7Total index 67 75-100 50-74 25-49 below 25
Table IV.LRM index for IslamicBank Y
GradingAssessment of Bank Z Total points Excellent Good Satisfactory Poor
Asset side 24 26-35 17-25 8-16 below 8Liability side 14 26-35 17-25 8-16 below 8LRM policies 19 22-30 15-21 7-14 below 7Total index 57 75-100 50-74 25-49 below 25
Table V.LRM index for IslamicBank Z
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asset side is the increasing of NPF. It also makes banks difficult to find profitable andprospective business proposal to be financed.
However, whenever liquidity demanded exceed the internal cash reserves of Islamicbanks, two of them rely on repurchasing of Bank Indonesia Wadiah Certificate (SWBI) to
BI and one of them tends to just resell its Islamic securities (such as Islamic moneymarket securities) in the secondary market. For the other two, selling Islamic moneymarket securities in the secondary market is their second alternatives. Nonetheless, dueto the infant Islamic money market in the country, depending on it is not their ultimatepriority in the case of liquidity run.
Regarding financing real sector projects, they typically still prefer debt-basedprojects (Murabahah, Salam, Istishna, Ijarah) to equity-based projects (Mudarabah,Musharakah) or service-based projects (Wakalah, Hiwalah, Kafalah). Then the rest ofthe funds go to the Islamic securities and SWBI as the zero risk investment instruments.These are not actually an ideal LRM practices, because sharia principles require Islamicbanks to mostly utilize the funds for the equity based long-term and profitable projects.
Furthermore, for their future LRM planning, all of them unfortunately stillconcentrate on boosting the revenue from debt-based financing rather than equity-basedfinancing. Amongst other reasons are due to the difficulties to find profitable businessproposals, trusted entrepreneurs and because of unstable business condition. Despitesetting such future planning, if the industry wants to dominate the national bankingindustry, basically they have to be very competitive by offering high deposit return,various banking instruments, sharia compliant and giving large impact to thedevelopment of the people in general. One way to reach it is again through involvementin the equity based long-term business projects.
By the way, upon implementing the above approaches on asset side, the three Islamicbanks can so far maintain the sustainable financing performance. All of them gain agood grade as explained in Tables III-V, respectively. The index result shows a good
achievement although it is realized that some improvement should still be followed up inorder to make it more perfect as suggested above. Detailed of the index calculation can beseen in Appendix 3, Tables AVII-AIX.
Liquidity management policyThis aspect is considerably very essential to determine the successfulness of thecomprehensive efforts being done. The banks have been adopting several policies tohandle such risk. In terms of managing the appropriate liquidity management, they havedivision/team dealing with risk management including liquidity risk. Furthermore, theyprovide the asset and liability balancing by planning every usage of funds, havingquantitative model to accurately identify the funds being used, and insuring all depositswith governments owned insurance deposit (deposit guarantee institution). Some banks
set up a communication with big depositors regarding the schedule of liquiditywithdrawals.
Because it is corporate levels actions, every problem with regard to liquidity risk isprocessed by risk management team/division before being forwarded to the Board ofDirectors for the strategic decision. However, for the further policies in liquiditymanagement, the banks hope the government to sonly issue sovereign bond (sukuk) asone of the ideal Islamic instruments to manage liquidity andit will indeed act as abenchmark for all Islamic securities. Keep stabilizing the economic condition and
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socializing the Islamic banking are their other expectations to be provided by thegovernment in cooperation with all industry players.
As a result, the LRM index in this aspect introduces two banks which have anexcellent grade and one bank note for a good grade as seen Tables III-V. It is a very
remarkable achievement in terms of policy level. Although, some details of actions stillhave to be taken such as setting up a good communication between banks and theirdepositors with respect to managing and knowing their liquidity planning andtransaction behaviors. None of them are very cooperative with their depositors orbusiness partners while it is one of the core business values of Islamic banking operationand the main different between Islamic banking ways of treating their stakeholderscompared with conventional banking one. Detailed of the index calculation and actionsbeing explored in this aspect are explained by Appendix 4, Tables AX-AXII.
5. Overall, assessment of the Islamic banking industryFinally, the overall result of the LRM index comes up with a good grade for the
Indonesian Islamic banking industry. This result clearly explains the quality of therecent liquidity management mechanism in the industry. The big industrys players(the three Islamic banks) as the market driven prefer applying short-term liquiditymanagement with the ultimate purpose to gain short-term, liquid and sustainable profitto long-term liquidity management with the potential of a higher profit but uncertainand no guarantee of sustainability. By doing this, the Indonesian Islamic bankingindustry has been so far very successful to meet the expectation of depositors to receive apositive and regular payment of deposit returns and fulfill the demand of liquidity aswell (Ismal, 2008a, pp. 3-25). Nonetheless, the good grade index shows that they havenot reached the ideal practices of Islamic banking to manage liquidity and develop thereal sectors. Some improvements (as explained in the paper) need to be taken to redirectthe achievement of liquidity management index into the ideal one.
6. ConclusionIndonesian Islamic banking industry has been presenting a remarkable performanceand promising development since early 1990s. However, with regard to liquiditymanagement, an index assessment of all Islamic banks suggests that each Islamic bankstands between index grade of excellent, good, andsatisfactorybasedon the valuation oftheir asset side, liability side, and LRM policy. In overall, they have been successfullymaintaining a robust liquidity management by gaining a good grade index. Nonetheless,this good grade index does not imply an optimal accomplishment. Some efforts need tobe pursued to further improve the performance of the industry to manage liquidityparticularly to reach a better grade index and apply an ideal Islamic banking practices
based on sharia principles.At the end, it is realized that this paper limits its analysis to only three aspects being
evaluated (asset side, liability side, and banks liquidity management policy). Thefurther extension of this research can be considered, particularly to engage other aspectsof liquidity management such as from depositors perspective (liquidity behavior ofdepositors, withdrawal decision, etc.) or banking regulators such as central bank andgovernment policies. A better and wider impact of the index might also be gained if itinvolves all UUS instead of all Islamic banks to reach almost 100 percent market share of
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the total Islamic banking industry with more detail questions and strict criteria of thepoint calculation (decision on weight, allocation of points, etc.).
Notes
1. From the idea of Ahmed (2006).
2. Islamic banking industry consists of BUS, UUS, and BPRS. UUS is a special sharia bankingunit in conventional bank (windows system or dual banking system) while BPRS namesIslamic banks operated in suburb/rural areas.
3. As reported in BI (2006).
4. Conventional banks growth is only about 10 percent annually.
References
Ahmed, H. (2006), Assessing risk management system: an application to Islamic banks,paper presented at the 7th Harvard University Forum on Islamic Finance, Boston, MA,April 22-23.
Antonio, S. (1999), Sharia Bank for Bankers and Practitioners, 1st ed., Bank Indonesia andTazkia Institute, Jakarta.
BI (2005),Blue Print of Indonesian Islamic Banking Development, Islamic Banking Directorate ofBank Indonesia, Jakarta, pp. 18-22 (revision of 2002s Blue Print).
BI (2006), Annual report of Indonesian Islamic banking, Bank Indonesia, available at: www.bi.go.id.com (accessed June 3, 2007).
BI (2002-2007), Monthly statistics report of Indonesian Islamic banking statistics, BankIndonesia, available at: www.bi.go.id.com/ (accessed July 10, 2007).
Fiedler, R. (2000), Liquidity Risk, The Professional Handbook of Financial Risk Management,Butterworth-Heinemann, London.
Ismal, R. (2007), Islamic banking issues on liquidity risk management, paper presented at
Ustinov College Finance Seminar, Durham University.
Ismal, R. (2008a), Analysis of liquidity risk management practices in Islamic banking industry,unpublished academic paper, February, Durham University, Durham.
Ismal, R. (2008b), The potential of liquidity risk in Islamic banking, paper presented at SummerSchool in Islamic Banking and Finance, Durham University, February.
Kahf, M. (2000), Treatment of excess liquidity in the Arab Gambian Islamic Bank, avialble at:www.kahf.net/index.html (accessed January 20, 2007).
Ministry of Religion, Republic of Indonesia (2005), The Holy Quran, 10th ed., Diponegoro CV,Bandung.
(Appendices follow overleaf.)
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Appendix 1
Are private companies the dominant owners of your banks big amount of
deposits? 2
TOTAL POINTS TOTAL POINTS
TOTAL POINTS IN LIABILITY SIDE
Choice
of RankPoints
How do you score (1-4) blending deposit fund with other
banks for financing as your future plan with respected to
liquidity risk management ?
How do you score (1-4) attracting international investors as
your future plan with respected to liquidity risk management ?
How do you score (1-4) designing a more suitable deposit
instruments to manage liquidity withdrawal as your future plan
with respected to liquidity risk management ?
How do you score (1-4) directing deposit into long term
placement as your future plan with respected to liquidity risk
management ?1
2
4
3
0
0
3
3
30
0 3
3
4
Does the daily transaction needs push depositors to liquidate their deposit ? 0
Liquidity Risk Assessment
5
1
2
3
4
Assuming companies, which have big amount of deposit, will not take it
shortly (very cooperative), how many of them lies between 21% - 40% of
total depositors?
Assuming companies, which have big amount of deposit, will not take it
shortly (very cooperative), how many of them lies between 41% - 60% of
total depositors?
Assuming companies, which have big amount of deposit, will not take it
shortly (very cooperative), how many of them lies between 61% - 80% of
total depositors?
Related to liquidity risk management, do you charge a penalty for immaturedeposit withdrawal ?
Related to liquidity risk management, do you require depositors to give prior
notice before withdrawing their deposit?
Assuming companies which have big amount of deposit will not take it
shortly (very cooperative), how many of them lies between 0% - 20% of total
depositors?Assuming rolled over deposit will not cause any short-term
liquidity pressure, how many of them lies between 41% - 60%
of total deposits?
0
0
Points
if Yes
3
3
Liquidity Risk AssessmentPoints
if No
Assuming rolled over deposit will not cause any short-termliquidity pressure, how many of them lies between 0% - 20%
of total deposits?
Assuming rolled over deposit will not cause any short-term
liquidity pressure, how many of them lies between 21% - 40%
of total deposits?
Do you consider the big amount of short-term deposit as the
main trigger of liquidity risk problem?
Points if
Yes
Points if
No
Assuming rolled over deposit will not cause any short-term
liquidity pressure, how many of them lies between 61% - 80%
of total deposits?
Assuming rolled over deposit will not cause any short-term
liquidity pressure, how many of them lies between 81% -
100% of total deposits?
3
4
5
2
1
2Does increasing trend of banks interest encourage depositors to take their
money out?
Does switching deposit tenor (whichever promising higher return) underlie
depositors to liquidate their deposit ?
Do you consider rational depositors as the main trigger of
liquidity risk problem in your bank?
Are foreign companies the dominant owners of your banks big amount of
deposits?
Are other banks the dominant owners of your banks big amount of
deposits?
Assuming companies, which have big amount of deposit, will not take it
shortly (very cooperative), how many of them lies between 81% - 100% of
total depositors?
Are government institutions the dominant owners of your banks big amount
of deposits?
1
3
24 11
35
2
2
2
Table AI.
Assessment on theliability side (surveymanual)
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Do you finance short term project by using short term deposit ? 1 0
Do you have difficulties in dealing with Islamic money market ? 0 1
TOTAL POINTS TOTAL POINTS
TOTAL POINTS IN ASSET SIDE
1 2
35
18 17
5 1
1
1
3
1
1
1
1
3
1
2
4
2
4
1
1
1
1
1
3
1
3
1 1
1
1
2 1
1 1
Choice
of RankPoints
2 1
2
1
4
1 1
2 1
In case of business partners default, how do you score (1-3) the
importance of switching (selling) the banks ownership to other
party in order to cover your financing loss?
In case of business partners default, how do you score (1-3) the
importance of giving extra time to business partners to ratify their
payment obligation?
0
0 1
1 0
How do you score (1-2) increasing revenue from equity based
financing as your future plan with respected to liquidity risk
management ?
0
How do you score (1-4) your financing priority policy to finance
private companies projects?
How do you score (1-4) your financing priority policy to have join
financing?
How do you score (1-4) your long term financing problem related
to difficulties in finding trusted business partners?
How do you score (1-4) your long term financing problem related
to difficulties in finding profitable business proposal?
How do you score (1-4) your financing priority policy to finance
government projects?
How do you score (1-4) your financing priority policy to finance
retail entrepreneurs projects?
Points
if Yes
Points
if No
0
0In case of liquidity run, how do you score (1-2) the importance of
reselling (repo) your owned SWBI as your liquidity run mitigation
strategy?
In case of business partners' default, how do you score (1-3) the
importance of liquidating their collateral or asset (financing
objects) in order to cover your financing loss?
1 0
Related to liquidity risk management, do you monitor and evaluate
the banks financing, including intensive coordination with your
business partners?
Related to liquidity risk management, do you adjust maturity of
deposit with flow of fund from financing?
Liquidity Risk Assessment
1
2
Do you pool all types of deposits before lending it with certain
portfolio ?
Do you advance short term deposit into Islamic securities and SWBI
whilst long term deposit is placed for long term project financing ?
Do you care with non-performing financing leading to decreasing
profit sharing to depositors as one of serious liquidity problems?
How do you score (1-5) debt based financing (Murabahah, Ijarah,
Salam dan Istisna) based on your financing priority strategy ?
Do you anticipate unpleasant economic condition that causes high
banking interest?
Do you have difficulties in financing prospective and profitable
projects ? .
How do you score (1-2) the importance of selling your owned
Islamic securities in secondary market when demand for liquidityexceeds your cash reserve?
How do you score (1-2) the importance of reselling your owned
SWBI (repo) when demand for liquidity exceeds your cash reserve?
Choice
of RankPoints
In case of liquidity run, how do you score (1-2) the importance of
selling your owned Islamic securities in secondary market as
your liquidity run mitigation strategy?
Liquidity Risk Assessment
2 1
How do you score (1-2) increasing revenue from debt based
financing as your future plan with respected to liquidity risk
management ?
2 2
How do you score (1-5) equity based financing (Mudarabah,
Musyarakah) based on your financing priority strategy ?
How do you score (1-5) service based financing (Wakalah, Hiwalah)
based on your financing priority strategy ?
How do you score (1-5) buying Islamic money market securities,
sukuk or Islamic stock based on your financing priority strategy ?
How do you score (1-5) placement fund in SWBI based on your
financing priority strategy ?
How do you score (1-4) your long term financing problem related
to uncertainty in economic condition?
How do you score (1-4) your long term financing problem related
to limited personnel to tackle (monitor, evaluate, value, etc)
business partners performance?
Table AII.Assessment on the asset
side (survey manual)
Assessment ofliquidity
management
157
8/12/2019 1864446
12/21
Do you want BI to lessen reserve requirements (GWM) policy? 0 1
TOTAL POINTS TOTAL POINTS
TOTAL POINTS IN LIQUIDITY MANAGEMENT POLICY
2
0
0
0
1
Points
if No
0 1
1
0
1
1
1
1
2
3
1
4
Points if
Yes
0
0
0
0
In case of liquidity run, how do you score (1-5) the importance
of using intra day liquidity facility from BI as your liquidity run
mitigation strategy?
In case of liquidity run, how do you score (1-5) the importanceof using deposit guarantee from deposit guarantee institution
(LPS) as your liquidity run mitigation strategy?
In case of business partners default, do you compensate it with
profit reserve?
1
1
1
1
1
0
0How do you score (1-3) using excess reserve GWM in Bank
Indonesia when demand for liquidity exceeds your cashreserve?
How do you score (1-3) using intra day liquidity facility in Bank
Indonesia when demand for liquidity exceeds your cash
reserve?
In case of liquidity run, how do you score (1-5) the importance
of borrowing some money from Islamic money market (PUAS)
as your liquidity run mitigation strategy?
In case of liquidity run, how do you score (1-5) the importance
of selling your owned Islamic securities in secondary market as
your liquidity run mitigation strategy?
Choice
of RankPoints
How do you score (1-3) borrowing some money from Islamic
money market (PUAS) when demand for liquidity exceeds your
cash reserve?
In case of liquidity run, how do you score (1-5) the importance
of reselling (repo) SWBI as your liquidity run mitigation
strategy?
2
1
3
1
1
1
Do you want BI to add another Islamic monetary instrument
besides SWBI?
Do you want all parties to keep socializing Islamic banking to
public?
Do you want BI/government to give consultation to solve liquidity
problem?
Do you want BI to be ready to inject emergency fund for Islamic
bank that is/are in difficult liquidity problem?
Points
if Yes
Points
if No
Do depositors who have high nominal deposit explain their
financial planning/purpose of deposit?
0
0
0
3
2
1
1
In case of serious liquidity problems and decision has to be taken,
will it be under responsibility of Board of Directors upon
recommendation from risk management team?
In case of serious liquidity problems and decision has to be taken,
will it be under responsibility of President Directors upon the result
of Board of Directors meeting?
In case of serious liquidity problems and decision has to be taken,
will it be under responsibility of risk management team (routine
decision) but soon will be forward into Board of Directors if condition
becomes worst (liquidity run)?
Is there no previous communication/agreement with depositors
who have high nominal deposit regarding their timing to
withdraw it?
Do you hope government to issue sovereign sukuk in order to
prevent liquidity risk problem?
Do you government to improve economic stability to raise business
profit of enterprises? 1
1
1
1
Liquidity Risk Assessment Liquidity Risk Assessment
5 1
Related to liquidity risk management, do you have team/division
dealing with liquidity risk ?
Related to liquidity risk management, do you arrange financial
planning with deposit available ?
Related to liquidity risk management, do you have quantitativemodel to maintain equilibrium of liquidity?
Related to liquidity risk management, are all your deposits being
insured against liquidity risk problem?
Related to liquidity risk management, do you have mudarabah
muqayyadah deposit to finance specific projects?
17 13
30
Do depositors who have high nominal deposit explain their
timing to take their money from deposit?
Do you ask extra time to prepare for liquidity if depositors who
have high nominal deposit want to liquidate their deposit?
1
0
0
2
Table AIII.Assessment on theliquidity managementpolicy (survey manual)
IMEFM3,2
158
8/12/2019 1864446
13/21
Appendix 2
Are private companies the dominant owners of your banks big
TOTAL POINTS TOTAL POINTS
TOTAL POINTS IN LIABILITY SIDE
Does increasing trend of banks interest encourage depositors to
take their money out?
Does switching deposit tenor (whichever promising higher return)
underlie depositors to liquidate their deposit ?
Do you consider rational depositors as the main trigger of
liquidity risk problem in your bank?
Are foreign companies the dominant owners of your banks big
amount of deposits?
Are other banks the dominant owners of your banks big amount of
deposits?
Assuming companies, which have big amount of deposit, will nottake it shortly (very cooperative), how many of them lies between
81% - 100% of total depositors?
Are government institutions the dominant owners of your banks big
amount of deposits?
Do you consider the big amount of short-term deposit as the
main trigger of liquidity risk problem?
Points if
Yes
Points if
No
Assuming rolled over deposit will not cause any short-term
liquidity pressure, how many of them lies between 61% - 80%
of total deposits?
Assuming rolled over deposit will not cause any short-term
liquidity pressure, how many of them lies between 81% -
100% of total deposits?
5
Points
if No
Assuming rolled over deposit will not cause any short-term
liquidity pressure, how many of them lies between 0% - 20%
of total deposits?
Assuming rolled over deposit will not cause any short-term
liquidity pressure, how many of them lies between 21% - 40%
of total deposits?
Assuming rolled over deposit will not cause any short-term
liquidity pressure, how many of them lies between 41% - 60%
of total deposits?
0
Liquidity Risk AssessmentPoints
if Yes
Assuming companies, which have big amount of deposit, will not
take it shortly (very cooperative), how many of them lies between
21% - 40% of total depositors?
Assuming companies, which have big amount of deposit, will not
take it shortly (very cooperative), how many of them lies between
41% - 60% of total depositors?
Assuming companies, which have big amount of deposit, will not
take it shortly (very cooperative), how many of them lies between
61% - 80% of total depositors?
Related to liquidity risk management, do you charge a penalty for
immature deposit withdrawal ?
Related to liquidity risk management, do you require depositors to
give prior notice before withdrawing their deposit?
Assuming companies which have big amount of deposit will not take
it shortly (very cooperative), how many of them lies between 0% -
20% of total depositors?
3
Liquidity Risk Assessment
3
4
Does the daily transaction needs push depositors to liquidate their
deposit ?0
3
3
0
3
Choice
of Rank Points
How do you score (1-4) blending deposit fund with other
banks for financing as your future plan with respected to
liquidity risk management ?
How do you score (1-4) attracting international investors as
your future plan with respected to liquidity risk management ?
How do you score (1-4) designing a more suitable deposit
instruments to manage liquidity withdrawal as your future plan
with respected to liquidity risk management ?
How do you score (1-4) directing deposit into long term
placement as your future plan with respected to liquidity risk
management ?
0
0
2
0
24
16 8
5
3
4
6
Table AIV.Assessment on theliability side of Bank X
Assessment ofliquidity
management
159
8/12/2019 1864446
14/21
Do you finance short term project by using short term deposit ? 0
Do you have difficulties in dealing with Islamic money market ? 1
TOTAL POINTS TOTAL POINTS
TOTAL POINTS IN ASSET SIDE
In case of liquidity run, how do you score (1-2) the importance of
reselling (repo) your owned SWBI as your liquidity run mitigationstrategy?
In case of business partners' default, how do you score (1-3) the
importance of liquidating their collateral or asset (financing
objects) in order to cover your financing loss?
Choice
of RankPoints
In case of liquidity run, how do you score (1-2) the importance of
selling your owned Islamic securities in secondary market as
your liquidity run mitigation strategy?
Liquidity Risk Assessment
3 0
How do you score (1-5) equity based financing (Mudarabah,
Musyarakah) based on your financing priority strategy ?
How do you score (1-5) service based financing (Wakalah, Hiwalah)
based on your financing priority strategy ?
How do you score (1-5) buying Islamic money market securities,
sukuk or Islamic stock based on your financing priority strategy ?
How do you score (1-5) placement fund in SWBI based on your
financing priority strategy ?
Do you pool all types of deposits before lending it with certain
portfolio ?
Do you advance short term deposit into Islamic securities and SWBI
whilst long term deposit is placed for long term project financing ?
Do you care with non-performing financing leading to decreasing
profit sharing to depositors as one of serious liquidity problems?
How do you score (1-5) debt based financing (Murabahah, Ijarah,
Salam dan Istisna) based on your financing priority strategy ?
Do you anticipate unpleasant economic condition that causes high
banking interest?
Do you have difficulties in financing prospective and profitable
projects ? .
How do you score (1-2) the importance of selling your owned
Islamic securities in secondary market when demand for liquidityexceeds your cash reserve?
How do you score (1-2) the importance of reselling your owned
SWBI (repo) when demand for liquidity exceeds your cash reserve?
Points if
Yes
Points
if No
Related to liquidity risk management, do you monitor and evaluate
the banks financing, including intensive coordination with your
business partners?
Related to liquidity risk management, do you adjust maturity of
deposit with flow of fund from financing?
Liquidity Risk Assessment
2
1
How do you score (1-4) your long term financing problem related
to uncertainty in economic condition?
How do you score (1-4) your long term financing problem related
to limited personnel to tackle (monitor, evaluate, value, etc)
business partners performance?
0
How do you score (1-4) your financing priority policy to finance
private companies projects?
0
1
0
1
How do you score (1-2) increasing revenue from debt based
financing as your future plan with respected to liquidity risk
management ?
How do you score (1-2) increasing revenue from equity based
financing as your future plan with respected to liquidity risk
management ?
How do you score (1-4) your financing priority policy to have join
financing?
How do you score (1-4) your long term financing problem related
to difficulties in finding trusted business partners?
How do you score (1-4) your long term financing problem related
to difficulties in finding profitable business proposal?
How do you score (1-4) your financing priority policy to finance
retail entrepreneurs projects?
2 1
1
2
4
1 1
1 0
3
0
1
1
Choice
of RankPoints
In case of business partners default, how do you score (1-3) the
importance of switching (selling) the banks ownership to other
party in order to cover your financing loss?
In case of business partners default, how do you score (1-3) the
importance of giving extra time to business partners to ratify their
payment obligation?
How do you score (1-4) your financing priority policy to finance
government projects?
2 1
1 1
1
2
2
1
4
1
1
1
1
3
3
1
2
4
1
1
1
1
11 11
22
2
1
0
0
5 1
0
Table AV.Assessment on the assetside of Bank X
IMEFM3,2
160
8/12/2019 1864446
15/21
Do you want BI to lessen reserve requirements (GWM) policy? 1
TOTAL POINTS TOTAL POINTS
TOTAL POINTS IN LIQUIDITY MANAGEMENT POLICY
Points
if Yes
Points
if No
Do depositors who have high nominal deposit explain their
financial planning/purpose of deposit?
0
3
In case of liquidity run, how do you score (1-5) the importance
of borrowing some money from Islamic money market (PUAS)
as your liquidity run mitigation strategy?
Do depositors who have high nominal deposit explain their
timing to take their money from deposit?
Do you ask extra time to prepare for liquidity if depositors who
have high nominal deposit want to liquidate their deposit?
Do you hope government to issue sovereign sukuk in order toprevent liquidity risk problem?
Do you government to improve economic stability to raise business
profit of enterprises?
1
1
1
1
Do you want BI to add another Islamic monetary instrument
besides SWBI?
Do you want all parties to keep socializing Islamic banking to
public?
Do you want BI/government to give consultation to solve liquidity
problem?
Is there no previous communication/agreement with depositors
who have high nominal deposit regarding their timing to
withdraw it?
Related to liquidity risk management, do you have mudarabah
muqayyadah deposit to finance specific projects?
In case of serious liquidity problems and decision has to be taken,
will it be under responsibility of Board of Directors upon
recommendation from risk management team?
In case of serious liquidity problems and decision has to be taken,
will it be under responsibility of President Directors upon the result
of Board of Directors meeting?
In case of serious liquidity problems and decision has to be taken,
will it be under responsibility of risk management team (routine
decision) but soon will be forward into Board of Directors if condition
becomes worst (liquidity run)?
Related to liquidity risk management, are all your deposits being
insured against liquidity risk problem?
In case of liquidity run, how do you score (1-5) the importance
of selling your owned Islamic securities in secondary market as
your liquidity run mitigation strategy?
Choice
of RankPoints
How do you score (1-3) borrowing some money from Islamic
money market (PUAS) when demand for liquidity exceeds your
cash reserve?
2
1
3
1
1
3
How do you score (1-3) using excess reserve GWM in Bank
Indonesia when demand for liquidity exceeds your cash
reserve?
How do you score (1-3) using intra day liquidity facility in Bank
Indonesia when demand for liquidity exceeds your cash
reserve?
In case of business partners default, do you compensate it with
profit reserve?
1
1
1
1
Do you want BI to be ready to inject emergency fund for Islamic
bank that is/are in difficult liquidity problem?
Related to liquidity risk management, do you have team/division
dealing with liquidity risk ?
Related to liquidity risk management, do you arrange financial
planning with deposit available ?
Related to liquidity risk management, do you have quantitative
model to maintain equilibrium of liquidity?
0
2
0
0
Liquidity Risk Assessment Liquidity Risk Assessment
5 1
1
1
1 1
1
2
Points
if No
4
In case of liquidity run, how do you score (1-5) the importance
of using intra day liquidity facility from BI as your liquidity run
mitigation strategy?
In case of liquidity run, how do you score (1-5) the importance
of using deposit guarantee from deposit guarantee institution
(LPS) as your liquidity run mitigation strategy?
In case of liquidity run, how do you score (1-5) the importance
of reselling (repo) SWBI as your liquidity run mitigation
strategy?
Points if
Yes
13 9
22
0
0
1
0
Table AVI.Assessment on the
liquidity managementpolicy of Bank X
Assessment ofliquidity
management
161
8/12/2019 1864446
16/21
Appendix 3
Are private companies the dominant owners of your banks big
TOTAL POINTS TOTAL POINTS
TOTAL POINTS IN LIABILITY SIDE
0
0
How do you score (1-4) designing a more suitable deposit
instruments to manage liquidity withdrawal as your future plan
with respected to liquidity risk management ?
How do you score (1-4) directing deposit into long term
placement as your future plan with respected to liquidity risk
management ?
0
15 7
22
0
How do you score (1-4) blending deposit fund with other
banks for financing as your future plan with respected to
liquidity risk management ?
How do you score (1-4) attracting international investors as
your future plan with respected to liquidity risk management ?
5
3
3
0
Choice
of RankPoints
4
3
6
0
4
Does the daily transaction needs push depositors to liquidate their
deposit ?0
2
Points
if Yes
Assuming companies, which have big amount of deposit, will not
take it shortly (very cooperative), how many of them lies between
21% - 40% of total depositors?
Assuming companies, which have big amount of deposit, will not
take it shortly (very cooperative), how many of them lies between
41% - 60% of total depositors?
Assuming companies, which have big amount of deposit, will not
take it shortly (very cooperative), how many of them lies between
61% - 80% of total depositors?
Related to liquidity risk management, do you charge a penalty for
immature deposit withdrawal ?
Related to liquidity risk management, do you require depositors to
give prior notice before withdrawing their deposit?
Assuming companies which have big amount of deposit will not take
it shortly (very cooperative), how many of them lies between 0% -
20% of total depositors?
3
3
Liquidity Risk AssessmentPoints
if No
Assuming rolled over deposit will not cause any short-term
liquidity pressure, how many of them lies between 0% - 20%
of total deposits?
Assuming rolled over deposit will not cause any short-term
liquidity pressure, how many of them lies between 21% - 40%
of total deposits?
Assuming rolled over deposit will not cause any short-term
liquidity pressure, how many of them lies between 41% - 60%
of total deposits?
Points if
Yes
Points if
No
Assuming rolled over deposit will not cause any short-term
liquidity pressure, how many of them lies between 61% - 80%
of total deposits?
Assuming rolled over deposit will not cause any short-term
liquidity pressure, how many of them lies between 81% -
100% of total deposits?
4
Liquidity Risk Assessment
Does increasing trend of banks interest encourage depositors to
take their money out?
Does switching deposit tenor (whichever promising higher return)
underlie depositors to liquidate their deposit ?
Do you consider rational depositors as the main trigger of
liquidity risk problem in your bank?
Are foreign companies the dominant owners of your banks big
amount of deposits?
Are other banks the dominant owners of your banks big amount of
deposits?
Assuming companies, which have big amount of deposit, will nottake it shortly (very cooperative), how many of them lies between
81% - 100% of total depositors?
Are government institutions the dominant owners of your banks big
amount of deposits?
Do you consider the big amount of short-term deposit as the
main trigger of liquidity risk problem?
Table AVII.Assessment on theliability side of Bank Y
IMEFM3,2
162
8/12/2019 1864446
17/21
Do you finance short term project by using short term deposit ? 1
Do you have difficulties in dealing with Islamic money market ? 0
TOTAL POINTS TOTAL POINTS
TOTAL POINTS IN ASSET SIDE
1111
22
2
1
0
0
4 0
1
1
1
1
1
3
1
2
4
4
1
1
1
1
3
1 1
1
2 0
1
1
Choice
of RankPoints
In case of business partners default, how do you score (1-3) the
importance of switching (selling) the banks ownership to other
party in order to cover your financing loss?
In case of business partners default, how do you score (1-3) the
importance of giving extra time to business partners to ratify their
payment obligation?
How do you score (1-4) your financing priority policy to finance
government projects?
2
1
1
0
3
5
1 1
1 0
2
How do you score (1-2) increasing revenue from debt based
financing as your future plan with respected to liquidity risk
management ?
How do you score (1-2) increasing revenue from equity based
financing as your future plan with respected to liquidity risk
management ?
How do you score (1-4) your financing priority policy to have join
financing?
How do you score (1-4) your long term financing problem related
to difficulties in finding trusted business partners?
How do you score (1-4) your long term financing problem related
to difficulties in finding profitable business proposal?
1
1
2
How do you score (1-4) your long term financing problem related
to uncertainty in economic condition?
How do you score (1-4) your long term financing problem related
to limited personnel to tackle (monitor, evaluate, value, etc)
business partners performance?
How do you score (1-4) your financing priority policy to finance
private companies projects?
0
0How do you score (1-4) your financing priority policy to finance
retail entrepreneurs projects?
2
Points if
Yes
Points
if No
Related to liquidity risk management, do you monitor and evaluate
the banks financing, including intensive coordination with your
business partners?
Related to liquidity risk management, do you adjust maturity of
deposit with flow of fund from financing?
Liquidity Risk Assessment
2
0
Do you pool all types of deposits before lending it with certain
portfolio ?
Do you advance short term deposit into Islamic securities and SWBI
whilst long term deposit is placed for long term project financing ?
Do you care with non-performing financing leading to decreasing
profit sharing to depositors as one of serious liquidity problems?
How do you score (1-5) debt based financing (Murabahah, Ijarah,
Salam dan Istisna) based on your financing priority strategy ?
Do you anticipate unpleasant economic condition that causes high
banking interest?
Do you have difficulties in financing prospective and profitable
projects ? .
How do you score (1-2) the importance of selling your owned
Islamic securities in secondary market when demand for liquidity
exceeds your cash reserve?
How do you score (1-2) the importance of reselling your owned
SWBI (repo) when demand for liquidity exceeds your cash reserve?
How do you score (1-5) equity based financing (Mudarabah,
Musyarakah) based on your financing priority strategy ?
How do you score (1-5) service based financing (Wakalah, Hiwalah)
based on your financing priority strategy ?
How do you score (1-5) buying Islamic money market securities,
sukuk or Islamic stock based on your financing priority strategy ?
How do you score (1-5) placement fund in SWBI based on your
financing priority strategy ?
In case of liquidity run, how do you score (1-2) the importance of
reselling (repo) your owned SWBI as your liquidity run mitigation
strategy?
In case of business partners' default, how do you score (1-3) the
importance of liquidating their collateral or asset (financing
objects) in order to cover your financing loss?
Choice
of RankPoints
In case of liquidity run, how do you score (1-2) the importance of
selling your owned Islamic securities in secondary market as
your liquidity run mitigation strategy?
Liquidity Risk Assessment
3 0
2 1
Table AVIII.Assessment on the asset
side of Bank Y
Assessment ofliquidity
management
163
8/12/2019 1864446
18/21
Do you want BI to lessen reserve requirements (GWM) policy? 0
TOTAL POINTS TOTAL POINTS
TOTAL POINTS IN LIQUIDITY MANAGEMENT POLICY
815
23
2
0
1
Points
if No
0
5 1
1
1
0
1
2
3
6
4
Points if
Yes
0
In case of serious liquidity problems and decision has to be taken,
will it be under responsibility of President Directors upon the result
of Board of Directors meeting?
In case of serious liquidity problems and decision has to be taken,
will it be under responsibility of risk management team (routine
decision) but soon will be forward into Board of Directors if condition
becomes worst (liquidity run)?
Do you want BI to add another Islamic monetary instrument
besides SWBI?
Do you want all parties to keep socializing Islamic banking to
public?
In case of business partners default, do you compensate it with
profit reserve?
1
1
1
1
1
2
Do you want BI/government to give consultation to solve liquidity
problem?
Do you want BI to be ready to inject emergency fund for Islamic
bank that is/are in difficult liquidity problem?
Choice
of RankPoints
How do you score (1-3) borrowing some money from Islamic
money market (PUAS) when demand for liquidity exceeds your
cash reserve?
In case of liquidity run, how do you score (1-5) the importance
of reselling (repo) SWBI as your liquidity run mitigation
strategy?
1
2
3
0
0
1
Do depositors who have high nominal deposit explain their
timing to take their money from deposit?
Do you ask extra time to prepare for liquidity if depositors who
have high nominal deposit want to liquidate their deposit?
Do you hope government to issue sovereign sukuk in order toprevent liquidity risk problem?
Do you government to improve economic stability to raise business
profit of enterprises?
1
1
1
1
1
Do depositors who have high nominal deposit explain their
financial planning/purpose of deposit?
In case of liquidity run, how do you score (1-5) the importance
of borrowing some money from Islamic money market (PUAS)
as your liquidity run mitigation strategy?
In case of liquidity run, how do you score (1-5) the importance
of selling your owned Islamic securities in secondary market as
your liquidity run mitigation strategy?
In case of liquidity run, how do you score (1-5) the importance
of using intra day liquidity facility from BI as your liquidity run
mitigation strategy?
In case of liquidity run, how do you score (1-5) the importance
of using deposit guarantee from deposit guarantee institution
(LPS) as your liquidity run mitigation strategy?
Related to liquidity risk management, are all your deposits being
insured against liquidity risk problem?
Related to liquidity risk management, do you have mudarabah
muqayyadah deposit to finance specific projects?
In case of serious liquidity problems and decision has to be taken,
will it be under responsibility of Board of Directors upon
recommendation from risk management team?
Is there no previous communication/agreement with depositors
who have high nominal deposit regarding their timing to
withdraw it?
3
How do you score (1-3) using intra day liquidity facility in Bank
Indonesia when demand for liquidity exceeds your cash
reserve?
Liquidity Risk Assessment Liquidity Risk Assessment
Related to liquidity risk management, do you have team/division
dealing with liquidity risk ?
Related to liquidity risk management, do you arrange financial
planning with deposit available ? How do you score (1-3) using excess reserve GWM in Bank
Indonesia when demand for liquidity exceeds your cash
reserve?
Related to liquidity risk management, do you have quantitative
model to maintain equilibrium of liquidity?
Points
if Yes
Points
if No
Table AIX.Assessment on theliquidity managementpolicy of Bank Y
IMEFM3,2
164
8/12/2019 1864446
19/21
Appendix 4
Are private companies the dominant owners of your banks big amount of
deposits? 2
TOTAL POINTS TOTAL POINTS
TOTAL POINTS IN LIABILITY SIDE
18 6
24
2
2
Does increasing trend of banks interest encourage depositors to take their
money out?
Does switching deposit tenor (whichever promising higher return) underlie
depositors to liquidate their deposit ?
Do you consider rational depositors as the main trigger of
liquidity risk problem in your bank?
Are foreign companies the dominant owners of your banks big amount of
deposits?
Are other banks the dominant owners of your banks big amount of
deposits?
Assuming companies, which have big amount of deposit, will not take it
shortly (very cooperative), how many of them lies between 81% - 100% of
total depositors?
Are government institutions the dominant owners of your banks big amount
of deposits?
3
Do you consider the big amount of short-term deposit as the
main trigger of liquidity risk problem?
Points if
Yes
Points if
No
Assuming rolled over deposit will not cause any short-term
liquidity pressure, how many of them lies between 61% - 80%
of total deposits?
Assuming rolled over deposit will not cause any short-term
liquidity pressure, how many of them lies between 81% -
100% of total deposits?
2
Points
if Yes
3
3
Liquidity Risk AssessmentPoints
if No
Assuming rolled over deposit will not cause any short-term
liquidity pressure, how many of them lies between 0% - 20%
of total deposits?
Assuming rolled over deposit will not cause any short-term
liquidity pressure, how many of them lies between 21% - 40%
of total deposits?
Related to liquidity risk management, do you require depositors to give prior
notice before withdrawing their deposit?
Assuming companies which have big amount of deposit will not take it
shortly (very cooperative), how many of them lies between 0% - 20% of total
depositors?
Assuming rolled over deposit will not cause any short-term
liquidity pressure, how many of them lies between 41% - 60%
of total deposits?
Liquidity Risk Assessment
1
Assuming companies, which have big amount of deposit, will not take it
shortly (very cooperative), how many of them lies between 21% - 40% of
total depositors?
Assuming companies, which have big amount of deposit, will not take it
shortly (very cooperative), how many of them lies between 41% - 60% of
total depositors?
Assuming companies, which have big amount of deposit, will not take it
shortly (very cooperative), how many of them lies between 61% - 80% of
total depositors?
Related to liquidity risk management, do you charge a penalty for immature
deposit withdrawal ?
3
Does the daily transaction needs push depositors to liquidate their deposit ?
3
0
0
0
Choice
of RankPoints
How do you score (1-4) blending deposit fund with other
banks for financing as your future plan with respected to
liquidity risk management ?
How do you score (1-4) attracting international investors as
your future plan with respected to liquidity risk management ?
How do you score (1-4) designing a more suitable deposit
instruments to manage liquidity withdrawal as your future plan
with respected to liquidity risk management ?
How do you score (1-4) directing deposit into long term
placement as your future plan with respected to liquidity risk
management ?
1
2
Table AX.Assessment on theliability side of Bank Z
Assessment ofliquidity
management
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Do you finance short term project by using short term deposit ? 1
Do you have difficulties in dealing with Islamic money market ? 1
TOTAL POINTS TOTAL POINTS
TOTAL POINTS IN ASSET SIDE
How do you score (1-2) increasing revenue from debt based
financing as your future plan with respected to liquidity risk
management ?2
How do you score (1-5) equity based financing (Mudarabah,
Musyarakah) based on your financing priority strategy ?
How do you score (1-5) service based financing (Wakalah, Hiwalah)
based on your financing priority strategy ?
How do you score (1-5) buying Islamic money market securities,
sukuk or Islamic stock based on your financing priority strategy ?
How do you score (1-5) placement fund in SWBI based on your
financing priority strategy ?
How do you score (1-4) your long term financing problem related
to uncertainty in economic condition?
How do you score (1-4) your long term financing problem related
to limited personnel to tackle (monitor, evaluate, value, etc)
business partners performance?
Choice
of RankPoints
In case of liquidity run, how do you score (1-2) the importance of
selling your owned Islamic securities in secondary market as
your liquidity run mitigation strategy?
Liquidity Risk Assessment
2
Do you pool all types of deposits before lending it with certain
portfolio ?
Do you advance short term deposit into Islamic securities and SWBI
whilst long term deposit is placed for long term project financing ?
Do you care with non-performing financing leading to decreasing
profit sharing to depositors as one of serious liquidity problems?
How do you score (1-5) debt based financing (Murabahah, Ijarah,
Salam dan Istisna) based on your financing priority strategy ?
Do you anticipate unpleasant economic condition that causes high
banking interest?
Do you have difficulties in financing prospective and profitable
projects ? .
How do you score (1-2) the importance of selling your owned
Islamic securities in secondary market when demand for liquidityexceeds your cash reserve?
How do you score (1-2) the importance of reselling your owned
SWBI (repo) when demand for liquidity exceeds your cash reserve?
Related to liquidity risk management, do you monitor and evaluate
the banks financing, including intensive coordination with your
business partners?
Related to liquidity risk management, do you adjust maturity of
deposit with flow of fund from financing?
Liquidity Risk Assessment
2
In case of liquidity run, how do you score (1-2) the importance of
reselling (repo) your owned SWBI as your liquidity run mitigation
strategy?
In case of business partners' default, how do you score (1-3) the
importance of liquidating their collateral or asset (financing
objects) in order to cover your financing loss?
1
Points if
Yes
Points
if No
0
How do you score (1-2) increasing revenue from equity based
financing as your future plan with respected to liquidity risk
management ?
How do you score (1-4) your financing priority policy to finance
private companies projects?
How do you score (1-4) your financing priority policy to have join
financing?
How do you score (1-4) your long term financing problem related
to difficulties in finding trusted business partners?
How do you score (1-4) your long term financing problem related
to difficulties in finding profitable business proposal?
How do you score (1-4) your financing priority policy to finance
government projects?
How do you score (1-4) your financing priority policy to finance
retail entrepreneurs projects?
In case of business partners default, how do you score (1-3) the
importance of switching (selling) the banks ownership to other
party in order to cover your financing loss?
In case of business partners default, how do you score (1-3) the
importance of giving extra time to business partners to ratify their
payment obligation?
0
1
2
1
4
1
2
1
Choice
of RankPoints
2
1
3
1
2
2
4
1
1
1
3
3
1
2
4
1
14
12 2
5 1
1
1
3
Table AXI.Assessment on the assetside of Bank Z
IMEFM3,2
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Do you want BI to lessen reserve requirements (GWM) policy? 0
TOTAL POINTS TOTAL POINTS
TOTAL POINTS IN LIQUIDITY MANAGEMENT POLICY
14 5
19
Do depositors who have high nominal deposit explain their
timing to take their money from deposit?
Do you ask extra time to prepare for liquidity if depositors who
have high nominal deposit want to liquidate their deposit?
1
0
2
Liquidity Risk Assessment Liquidity Risk Assessment
5 1
Related to liquidity risk management, do you have team/division
dealing with liquidity risk ?
Related to liquidity risk management, do you arrange financial
planning with deposit available ?
Related to liquidity risk management, do you have quantitative
model to maintain equilibrium of liquidity?
Related to liquidity risk management, are all your deposits being
insured against liquidity risk problem?
Related to liquidity risk management, do you have mudarabah
muqayyadah deposit to finance specific projects?
In case of serious liquidity problems and decision has to be taken,
will it be under responsibility of Board of Directors upon
recommendation from risk management team?
In case of serious liquidity problems and decision has to be taken,
will it be under responsibility of President Directors upon the result
of Board of Directors meeting?
In case of serious liquidity problems and decision has to be taken,
will it be under responsibility of risk management team (routine
decision) but soon will be forward into Board of Directors if condition
becomes worst (liquidity run)?
Is there no previous communication/agreement with depositors
who have high nominal deposit regarding their timing to
withdraw it?
Do you hope government to issue sovereign sukuk in order toprevent liquidity risk problem?
Do you government to improve economic stability to raise business
profit of enterprises?
1
1
Points
if Yes
Points
if No
Do depositors who have high nominal deposit explain their
financial planning/purpose of deposit?
3
1
Do you want BI to add another Islamic monetary instrument
besides SWBI?
Do you want all parties to keep socializing Islamic banking to
public?
Do you want BI/government to give consultation to solve liquidity
problem?
Do you want BI to be ready to inject emergency fund for Islamic
bank that is/are in difficult liquidity problem?
Choice
of RankPoints
How do you score (1-3) borrowing some money from Islamic
money market (PUAS) when demand for liquidity exceeds your
cash reserve?
In case of liquidity run, how do you score (1-5) the importance
of reselling (repo) SWBI as your liquidity run mitigation
strategy?
2
1
3
1
1
1
How do you score (1-3) using excess reserve GWM in Bank
Indonesia when demand for liquidity exceeds your cash
reserve?
How do you score (1-3) using intra day liquidity facility in Bank
Indonesia when demand for liquidity exceeds your cash
reserve?
In case of liquidity run, how do you score (1-5) the importance
of borrowing some money from Islamic money market (PUAS)
as your liquidity run mitigation strategy?
In case of liquidity run, how do you score (1-5) the importance
of selling your owned Islamic securities in secondary market as
your liquidity run mitigation strategy?
In case of liquidity run, how do you score (1-5) the importance
of using intra day liquidity facility from BI as your liquidity run
mitigation strategy?
In case of liquidity run, how do you score (1-5) the importance
of using deposit guarantee from deposit guarantee institution
(LPS) as your liquidity run mitigation strategy?
In case of business partners default, do you compensate it with
profit reserve?
1
1
1
1
1
0
1
2
3
1
4
Points if
Yes
Points
if No
0
0
0
0
Table AXII.Assessment on the
liquidity managementpolicy of Bank Z
Assessment ofliquidity
management
167
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