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Fund Management And the Liquidity of The Bank

Author

Listed:
  • Gantiah Wuryandani
  • Ramlan Ginting
  • Dudy Iskandar
  • Zulkarnain Sitompul

    (Bank Indonesia)

Abstract

This paper analyzes the liquidity of banks, both precautionary and involuntary liquidity. We apply dynamic panel estimation on individual bank data covering the period of Januari 2002 to November 2011. The result shows that precautionary liquidity is more determined by the operation of the bank. On the other hand, the involuntary liquidity is more affected by the financial system condition. Related to the size, the effect of the financial system condition and the macroeconomy is larger for the small banks. Moreover, the monetary policy in the form minimum reserve requirement affects the precautionary liquidity of the small banks; while the central bank rate is less influential to the bank liquidity.

Suggested Citation

  • Gantiah Wuryandani & Ramlan Ginting & Dudy Iskandar & Zulkarnain Sitompul, 2014. "Fund Management And the Liquidity of The Bank," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 16(3), pages 1-28, January.
    • Handle: RePEc:idn:journl:v:16:y:2014:i:3h:p:1-28
    DOI: https://doi.org/10.21098/bemp.v16i3.446
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    Cited by:

    1. Kiyutsevskaya, Anna (Киюцевская, Анна) & Trunin, Pavel (Трунин, Павел), 2018. "Features of Interest Rate Policy Under the Inflation Targeting Regime [Особенности Процентной Политики При Режиме Таргетирования Инфляции]," Working Papers 031812, Russian Presidential Academy of National Economy and Public Administration.

    More about this item

    Keywords

    Banking; Liquidity; General Method of Moment;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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