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Measuring Liquidity Risk and Its Determinants in Commercial Banks of Bangladesh: An Empirical Investigation

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  • Md Shah Naoaj

    (New York University, USA)

Abstract

This study analyzes the determinants of liquidity risk in the banking sector using panel data from 28 banks and three different models: Pooled, Fixed Effect, and Random Effect. The results show that leverage has a consistently positive effect on liquidity risk, while the regulatory environment and bank size have a negative effect. Return on assets (ROA) and capital adequacy ratio (CAR) have varying impacts depending on individual bank characteristics. Real GDP has a consistently negative relationship with liquidity risk. These findings provide valuable insights for policymakers and bank managers on how to manage liquidity risk in the banking sector.

Suggested Citation

  • Md Shah Naoaj, 2023. "Measuring Liquidity Risk and Its Determinants in Commercial Banks of Bangladesh: An Empirical Investigation," European Journal of Business and Management Research, European Open Science, vol. 8(2), pages 250-254, March.
    • Handle: RePEc:epw:ejbmr0:v:8:y:2023:i:2:id:51889
    DOI: 10.24018/ejbmr.2023.8.2.1889
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