Liquidity risk, which is of critical importance for the stability of the financial system, presents a more unique and multidimensional structure, especially for participation banks operating under interest-free finance principles. This book compares the liquidity risk of participation banks and deposit banks operating in Turkey within a theoretical framework and in light of empirical findings; it reveals the effects of internal bank ratios and macroeconomic indicators on liquidity using panel data analysis methods. Analyses conducted using a comprehensive data set covering the period 2005–2022 show that participation banks are exposed to higher liquidity risk compared to deposit banks and that liquidity determinants differ significantly depending on the type of bank. The study offers an analytical perspective on liquidity management in participation banking and policy recommendations for regulators and practitioners, while serving as a reference work for academics, finance professionals, and readers interested in interest-free finance.