The Impact of Financial Risk Management on the Liquidity of Stocks in the Saudi Capital Market (Applied to Islamic Banks)

Abstract

This study aimed to identify the impact of financial risk management on the liquidity of stocks in the Saudi capital market, by looking at Islamic banks listed on the Saudi stock market and the risk management methods they employ, as well as to determine the types of financial risks that hinder the activities of such banks. After reviewing previous studies, it was hypothesized that there is a statistically significant relationship between financial risk management and stock liquidity. The study relied on published data and financial statements of four Islamic banks listed in the Saudi capital market. To test the hypothesis of the study, the historical, descriptive analytical, and inductive methods were employed. One of the most important findings of the study was the existence of a statistically significant relationship between credit risk and stock liquidity. In addition, there was a positive and statistically significant relationship between liquidity risk and stock liquidity in the Saudi capital market.