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Item LIQUIDITY MANAGEMENT IN ISLAMIC BANKS(UMT, Lahore, 2013) Amir IslamLiquidity Management, undoubtedly, is among the most imperative areas for any bank. Its importance multiplies manifold in an Islamic Bank (IB) as compared to a Conventional Bank, based on the fact that an Islamic Bank is conditioned to invest just in real assets. Thus, continuous creation of assets is vital for an IB. Moreover, IBs suffer from the absence of a mechanism programmed to divert surplus liquidity towards an IB faced with a liquidity crunch. Consequently, surplus funds in an IB multiply expense and liability until and unless these funds are put to investment. As an outcome, there may also be a compromise on Shariah guidelines, like investment in products such as Commodity Murabah which do not enjoy consensus of varied Islamic schools of thought. At the same time, an IB undergoing a liquidity crunch has to enhance profit rates to attract more deposit or to present a call option for adjustment of financing, in order to maintain balance in assets and liabilities. Resultantly, whichever of the two situations is being faced, bank profitability suffers a negative impact. A clearly defined mechanism among Islamic Banks, seemingly absent, can be helpful for a bank to manage liquidity crunch and aid another one in handling surplus liquidity, so that shortfall and surplus within the banking industry may be adjusted. There is also a dearth of money market instruments in the market, complying with the Shariah standards, to absorb excess liquidity of an Islamic bank. Similarly, there is an apparent paucity of money market tools or mechanism to bail the bank out of a liquidity crunch.Item PERCEPTION OF ISLAMIC BANKERS TOWARDS THE USE OF KARACHI-INTER BANK OFFER RATE (KIBOR)(UMT.Lahore, 2013-10) Shahjahan AlamgirIslamic finance and banking industry have rapidly flourished in current years. The importance of this industry as a substitute method of investment can no longer be refused. Recent international economic and financial crisis has exposed the methodical problems and failures of conventional finance and highlighted the strength and stability of Islamic financial system. Anyhow, Islamic finance has been practicing conventional benchmark, such as Karachi Inter Bank Offer Rate (KIBOR), to determine its own cost of funds, to price their Shariah-compliant products and services, and hence getting returns on their financial investments. This is so because Islamic finance has always dealt as a financial mediator for surplus and deficit units. This study documents the perception of key players i.e., Islamic Bankers working with Islamic banks, to highlight the issue directly responsible for slower-than-potential growth and expansion of this industry. Findings suggest that the industry could not perceive Islamic banking correctly, because professionals did not feel satisfied with the use of KIBOR as a benchmark