The objective of the research is to determine the factors varying the liquidity risk of Conventional and Islamic Sariah-based banks in Bangladesh. The random effect model is used in the study to detect the relationship between liquidity risk and each of the independent variables. The study shows that 7 of the variables including loan-to-asset ratio, cash ratio, equity ratio, size, return on asset, return on equity, and capital adequacy ratio are the significant determinants for conventional banks whereas loan to asset ratio, return on asset, cash ratio, and capital adequacy ratio are the significant determinants in Islamic banks. It is also found that the loan to asset ratio and return on asset have a positive impact but capital adequacy ratio, cash ratio, age of the bank, equity ratio & the size of the bank has a negative impact on the liquidity risk in both conventional and Islamic banks. The findings of this study can be very useful for different parties who want to find the relationship between firm-specific factors and the liquidity risk of the banking industry.

Keywords : Liquidity; Risk; Cash ratio; Return on Asset; Equity; Loan to Asset Ratio.