ABSTRACT
In the international scene, there is greater focus on financial stability. Various research organizations and financial institutions like the IMF, Basel Committee, European Bank and Asian Development Bank as well as researchers have compiled and attempted to measure indicators for financial soundness (see, for example, Chai and Barry, 2000; Dziobek et al., 2000 and Evans et al., 2000). In this regard, research has been conducted substantially to identify and measure them. The advent of Islamic financing institutions almost four decades ago has resulted in the appearance of new and different financial arrangements. These elements and the changes brought about in the financial and regulatory framework could affect liquidity. Hence more research work is essential to understand and analyse the vulnerability thereby caused in the financial sector.
