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Liquidity Risk and Bank Performance: An Empirical Test for Tunisian Banks

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  • Abdelaziz Hakimi
  • Khemais Zaghdoudi

Abstract

An important part of banking literature was interested in the relationship between credit risk and bank performance. However, only few studies investigated the association between liquidity risk and bank performance. The aim of this paper is to study the effect of liquidity risk on the Tunisian bank performance. To this end, we used a sample of 10 Tunisian banks over the period 1990-2013. By applying panel data method, precisely random effect regression, results show that liquidity risk decreases significantly Tunisian bank performance. Also, findings indicate that international financial crisis and inflation act negatively and significantly on bank performance.

Suggested Citation

  • Abdelaziz Hakimi & Khemais Zaghdoudi, 2017. "Liquidity Risk and Bank Performance: An Empirical Test for Tunisian Banks," Business and Economic Research, Macrothink Institute, vol. 7(1), pages 46-57, June.
    • Handle: RePEc:mth:ber888:v:7:y:2017:i:1:p:46-57
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    References listed on IDEAS

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    Cited by:

    1. Hamdi, Helmi & Hakimi, Abdelaziz, 2019. "Does Liquidity Matter on Bank Profitability? Evidence from a Nonlinear Framework for a Large Sample," Business and Economics Research Journal, Uludag University, Faculty of Economics and Administrative Sciences, vol. 10(1), pages 13-26, January.
    2. Mahmoud Al-Rdaydeh & Ali Matar & Odai Alghzwai, 2017. "Analyzing the Effect of Credit and Liquidity Risks on Profitability of Conventional and Islamic Jordanian Banks," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 7(12), pages 1145-1155, December.
    3. Ameni Ghenimi & Hasna Chaibi & Azhaar Lajmi, 2020. "The liquidity risk-credit risk-profitability trilogy: A comparative study between Islamic and conventional banks," Economics Bulletin, AccessEcon, vol. 40(3), pages 1900-1913.
    4. Sujan Chandra Paul & Probir Kumar Bhowmik & Mehbuba Nayan Famanna, 2021. "Impact of Liquidity on Profitability: A Study on the Commercial Banks in Bangladesh," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 11(1), pages 1-4.
    5. Hakimi Abdelaziz & Boussaada Rim & Hamdi Helmi, 2022. "The Interactional Relationships Between Credit Risk, Liquidity Risk and Bank Profitability in MENA Region," Global Business Review, International Management Institute, vol. 23(3), pages 561-583, June.
    6. Nesrine Djebali & Khemais Zaghdoudi, 2020. "Testing the governance-performance relationship for the Tunisian banks: a GMM in system analysis," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 6(1), pages 1-24, December.
    7. Alim, Wajid & Ali, Amjad & Metla, Mahwish Rauf, 2021. "The Effect of Liquidity Risk Management on Financial Performance of Commercial Banks in Pakistan," MPRA Paper 112482, University Library of Munich, Germany.
    8. Djebali, Nesrine & Zaghdoudi, Khemais, 2020. "Threshold effects of liquidity risk and credit risk on bank stability in the MENA region," Journal of Policy Modeling, Elsevier, vol. 42(5), pages 1049-1063.

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    More about this item

    Keywords

    Liquidity risk; Bank performance; Tunisian banks; Panel data analysis;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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