Factors Affecting Liquidity of Banks: Empirical Evidence from the Banking Sector of Pakistan
Syed Quaid Ali Shah,Imran Khan,Syed Sadaqat Ali Shah,Muhmmad Tahir +3 more
- Vol. 9, Iss: 1, pp 01
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In this paper, the authors investigated factors affecting liquidity of banks operating in Pakistan and found that the internal factors such as CAR, cost of funds and bank size are statistically significant but differently related to the liquid asset to total asset ratio and the total loans to total deposit ratio, respectively.Abstract:
This research investigates factors affecting liquidity of banks operating in Pakistan. Spanning from 2007 through 2016 the sample of the study includes 23 banks by employing relevant econometric specifications. The findings reveal that the internal factors such as capital adequacy ratio (CAR), cost of funds and bank size are statistically significant but differently related to the liquid asset to total asset ratio and to the total loans to total deposit ratio, respectively. The study finds that external or macro factors, such as GDP is statistically significant but affect liquidity of the banks differently. Unemployment, another external factor, also impact liquidity of banks very differently but it is statistically significant in the first measure of liquidity and statistically insignificant in the second measure of banks’ liquidity. Further, the results revealed that profitability is insignificantly related to liquidity while the relationship between deposits and bank liquidity is negative and statistically significant.read more
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Journal ArticleDOI
Contemporary Banking Theory
TL;DR: A review of the contemporary theory of financial intermediation can be found in this paper, where the focus is on contributions in the past 15 years or so that have advanced our understanding of why financial intermediaries exist, the credit allocation and other services they provide in spot and forward credit markets, the contractual nature and allocational consequences of the claims they issue, and the optimal design of bank regulation.
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Bank Regulatory Capital and Liquidity: Evidence from U.S. and European Publicly Traded Banks
TL;DR: In this paper, the authors investigate the relationship between bank regulatory capital and bank liquidity measured from on-balance sheet positions for European and U.S. publicly traded commercial banks and find that banks decrease their regulatory capital ratios when they face higher illiquidity or when they create more liquidity as measured by Berger and Bouwman (2009).
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Liquidity risk and performance of banking system
Ahmed Arif,Ahmed Nauman Anees +1 more
TL;DR: In this article, the authors examined liquidity risk in Pakistani banks and evaluated the effect on banks' profitability, showing that liquidity risk affects bank profitability significantly, with liquidity gap and non-performing as the two factors exacerbating the liquidity risk.
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Bank Capital and Liquidity Creation: Granger-Causality Evidence
TL;DR: In this paper, the authors examine the relation between capital and liquidity creation and show that capital negatively Granger-causes liquidity creation in this industry, where majority of banks are small.
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Banks, Short Term Debt and Financial Crises: Theory, Policy Implications and Applications
TL;DR: In this article, the authors show that the direction of causality is often precisely opposite to that traditionally suggested, while the empirical association between a financial institution's, or country's, short-term borrowing and susceptibility to crises may, in fact, exist.