This paper is aimed at analyzing the cyclical behavior of capital buffer Islamic and conventional banks in Indonesia. More specifically, this has three objectives. First, to test whether Indonesian banking industry as a whole countercyclical or procyclical. Second, there difference level compared banks. Third, cyclicality The analysis conducted using standard dynamic system generalized method m...

Conventional wisdom states that large banks are safer than small banks because they can diversify more. This conventional wisdom, however, confuses risk with probability of failure. While the law of large numbers does imply that a large bank is less likely to fail than a small bank, equating this tendency with lower risk falls into what Samuelson [1963] termed the fallacy of large numbers. A $1...

The outbreak of the recent financial crisis reveals significant problems in current bank practices in conventional liquidity risk management. To avoid catastrophic consequences, a holistic view, which captures the dynamic interactions between liquidity and other financial variables, should be taken to help banks make business decisions. However, few studies in the literature have addressed this...