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Determinants of banks liquidity: evidence from OIC countries

Author

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  • Ahmad Al-Harbi

Abstract

Purpose - Specifically, the purpose of this paper is to identify the key factors affecting banks’ liquidity in developing/less-developing countries. Design/methodology/approach - In this paper, the author uses the ordinary least-square fixed effect model on an unbalanced panel data set of all conventional banks (686 banks) operating in the organization of Islamic cooperation countries over the period 1989-2008. Findings - The estimation results show that all the determinants have statistically significant relationship with liquidity (except for concentration) but with different signs. On the one hand, capital ratio, foreign ownership, credit risk, inflation rate, monetary policy and deposit insurance negatively affected banks’ liquidity, while on the other hand, efficiency, size, off-balance sheet activities, market capitalization and concentration have a positive link with banks’ liquidity. Originality/value - According to the best of author’s knowledge, this is the first empirical study to investigate the determinants of banks liquidity in developing/less-developing countries using a large sample of banks (686 banks) and for long period (19 years).

Suggested Citation

  • Ahmad Al-Harbi, 2017. "Determinants of banks liquidity: evidence from OIC countries," Journal of Economic and Administrative Sciences, Emerald Group Publishing Limited, vol. 33(2), pages 164-177, November.
    • Handle: RePEc:eme:jeaspp:jeas-02-2017-0004
    DOI: 10.1108/JEAS-02-2017-0004
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    Citations

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    Cited by:

    1. Radoslaw Ciukaj & Krzysztof Kil, 2020. "Determinants of Polish Co-operative Banks’ Financial Liquidity in the Post-Crisis Perspective," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 70(4), pages 350-372, October.
    2. Tarek Eldomiaty & Amr Youssef & Heba Mahrous, 2022. "The Robustness of the Determinants of Overall Bank Risks in the MENA Region," JRFM, MDPI, vol. 15(10), pages 1-17, September.

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