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Effect of Structural Liquidity on Profitability of Polish Commercial Banks in 2009–2016

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  • Agnieszka Wojcik-Mazur

    (Czestochowa University of Technology, Faculty of Management, Institute of Finance, Banking and Accounting)

Abstract

This study estimated determinants of Polish banks’ profitability in the context of their liquidity policy. Return on equity (ROE) served as an independent variable in the model, whereas balance sheet measures were used as liquidity risk predictors. The surveys conducted based on four biggest commercial banks demonstrated relationships between liquidity risk and rates of return of banks. It should be emphasized that in the Polish economic landscape the growing share of both liquid assets and loans has a positive effect on ROE. Only a higher ratio of very highly liquid assets, identified with cash in the central bank, to the balance sheet total is a factor to limit ROE. Consequently, due to the specific conditions, Polish banks do not have to be interested in maintaining an increasing growth rate of lending activity since financial investments do not substantially inhibit their profitability (measured with ROE).

Suggested Citation

  • Agnieszka Wojcik-Mazur, 2017. "Effect of Structural Liquidity on Profitability of Polish Commercial Banks in 2009–2016," Problemy Zarzadzania, University of Warsaw, Faculty of Management, vol. 15(66), pages 53-63.
    • Handle: RePEc:sgm:pzwzuw:v:15:i:66:y:2017:p:53-63
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    References listed on IDEAS

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    More about this item

    Keywords

    liquidity risk; bank; profitability; determinants institutions; deposit guarantee schemes;
    All these keywords.

    JEL classification:

    • 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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