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Does cybersecurity risk affect bank liquidity creation?

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  • Fuszder, Md. Habibur Rahman
  • Sulong, Zunaidah
  • Abdullah, Mohammad
  • Abakah, Emmanuel Joel Aikins

Abstract

This paper examines the effect of cybersecurity risk on bank liquidity creation using a sample of 16,110 bank-year observations from 1998 to 2024 in the United States. We find that cybersecurity risk is associated with higher bank liquidity creation. This result is robust across alternative measures and remains consistent after addressing potential endogeneity concerns. Channel analysis indicates that the relationship is amplified by bank competition, risk-taking, and deposit outflows. The findings emphasize the need for banking sector regulators to improve regulatory policies and resilience strategies in response to the developing digital financial landscape.

Suggested Citation

  • Fuszder, Md. Habibur Rahman & Sulong, Zunaidah & Abdullah, Mohammad & Abakah, Emmanuel Joel Aikins, 2026. "Does cybersecurity risk affect bank liquidity creation?," Finance Research Letters, Elsevier, vol. 102(C).
    • Handle: RePEc:eee:finlet:v:102:y:2026:i:c:s1544612326006689
    DOI: 10.1016/j.frl.2026.110140
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