Developing Islamic Liquidity Management Instruments: Resolving the Impasse between Central Bank of Nigeria (CBN) and Jaiz Bank Plc

Shehu U.R. Aliyu

Abstract


Despite tremendous growth of Islamic finance globally, the
phenomenon is relatively new in Nigeria. The first full-
fledged Islamic bank, Jaiz Bank Plc, was licensed as a
regional bank by the Central Bank of Nigeria (CBN) in
2011 and it started its operations in January, 2012. Over 3
years now, the apex regulatory body is yet to develop robust
shari’ah complainant instruments for liquidity
management of Islamic banks in Nigeria. This paper
assesses the predicaments of Jaiz bank Plc over the last 3
years of its operations in the face of this challenge on the
basis of secondary data from the financial statements of the
Bank. Evidences on the basis of CAMEL analysis show
that while the Bank performs quite well in respect to capital
adequacy, assets and management quality, the Bank,
however, suffers most, on average, with respect to earning
quality and liquidity. The paper recommends that the
CBN should, while the shari’ah compliant instruments are
being awaited, introduce a measure of deposit-free and
loan-free for Jaiz Bank plc and consider lowering the
statutory liquidity ratio, all with a view of easing financial
constraints of the Bank.


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Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.

Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.