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deposits from less wealthy people. The opinion of
the researchers above is a study of Islamic countries,
so as to support the Islamic banking capital in the
country well.
According to the previous studies such as How et
al. (2005), Waemustafa and Sukri (2016) and
Megeid (2017) Islamic banking in Islamic countries
(which adheres to law, economics and politics
according to Islamic law, "Every country controlled
by law- Islamic law is an Islamic state whereas
every state controlled by different people's laws is a
non-Islamic state and no third country type (Al-
Adab Asy-Syar'iah 212) ") has a more robust
liquidity risk management system than any other
country. This is evidenced by the results of his study
that systematic factors which are not diversifiable
factors have no effect on liquidity risk and that affect
liquidity risk in Islamic banking in Islamic countries
is only the expansion of financing. The above
findings provide information that Islamic banking in
Islamic countries (in terms of liquidity risk
management) is more resilient than other countries,
as it is not affected by systematic circumstances.
The difference between theory and empirical
about liquidity risk in Islamic banking above
provides an opportunity for further analysis.
Therefore, this study aims to analyze systematic
factors on the risk of Islamic banking liquidity in
Islamic countries and non-Islamic countries (legally,
economically and politically according to Islamic
law). So it can be seen whether the different legal,
economic and political systems can have an impact
on the risk of liquidity in Islamic banking.
2 LITERATURE REVIEW
2.1 Historical of Islamic Banking
The formation of Islamic banking was initially
doubtful due to several reasons. The first reason is
because the system of free interest is impossible.
There are many opinions that say that an interest-
free banking system is something that is impossible
to do and not as common as banking in general
(Rivai et al., 2007). This opinion is naturally stated
because the banking business lives on interest. The
second reason is because of doubts about Islamic
banking financing its operations. This second reason
relates to the first reason, businesses in banking
grow and develop and finance their operations from
interest. If Islamic banking makes an interest-free
system in the banking system, then the income and
operational costs are doubtful. So that the
sustainability of the establishment of the banking is
questioned. Although there is a lot of evidence that
shows that Islamic banking is running and began its
establishment since the time of Prophet Muhammad
S.A.W and a friend of the Umayyads and Banu
Abassiyah, also in Europe (Rivai et al., 2007).
Islamic banking according to Antonio (2001) is a
banking system whose implementation is based on
Islamic law. The beginning of the establishment of
this system was based on the prohibition of usury in
Islam, namely the prohibition to lend or raise funds
by charging interest on loans / deposits. In addition,
this system was formed also due to the prohibition to
invest in illicit (prohibited) businesses and ways,
namely investing in liquor businesses and investing
with speculation. Meanwhile, the conventional
banking system cannot guarantee the absence of
these things.
For the first time, the establishment of an Islamic
bank was established in Egypt in 1963 under the
name of the Islamic bank Myt-Ghamr, whose capital
was assisted by King Faisal of Saudi Arabia. The
establishment of the Myt-Ghamr bank was
spearheaded by the Muslim Brotherhood, but did not
last long because it was immediately disbanded by
Gamal Abdul Nashr. However, the experiment of the
establishment of the Islamic banking Myt-Ghamr
(1963-1967) has been able to stimulate the thought
of the possibility of the establishment of Islamic
institutions engaged in finance and investment with
decent profits.
Then in 1970, Thalut Harb Pasha established an
Islamic bank under the name Bank Egypt. The bank
was re-established in Egypt and began operations in
1972 which is a private bank that has its own
autonomous rights. However, it is different from
Myt-Ghamr whose main activity is a profitable,
decent and lawful investment. The Egyptian Bank
has its main activities in the social field, such as
helping small businesses and helping the poor.
After that, Islamic banking began to appear in
various Islamic countries beginning with the events
of The Third Islamic Conference on February 29,
1972 in Jeddah. In a meeting attended by foreign
ministers of Islamic countries, an agreement was
reached to form a finance and economic department
under the secretary general assigned to explain the
Islamic banking system and gather opinions from
Islamic countries.
The results of the department's review were
discussed at the first meeting of the finance
ministers of the Organization of Islamic Cooperation
(OIC) in December 1973. The meeting produced a
statement to establish an Islamic banking. The rapid
development of Islamic banking turned out to be
inseparable from the contribution played by the
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