Basel Requirement and Financial Stability of Islamic Banks in Selected Asian Countries

The main objective of this study is to examine the impact of capitalization, liquidity and leverage on Basel III requirements on the financial stability of Islamic banking in four selected Asian countries namely Malaysia, Indonesia, Singapore and Thailand. The results show that capital requirement (TCR) and leverage requirement (TLTA) have significant effect to Islamic bank stability in these four selected Asian countries. However, liquidity ratio (LADST) does not significantly affect Islamic bank stability. This study concludes that capital and leverage requirements as components of bank regulation in Basel III may be applicable to promote Islamic bank stability in these selected Asian countries. However, liquidity requirement should be reviewed further as it has different mechanism to promote bank stability in Islamic Bank