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How do financial crises affect commercial bank liquidity? Evidence from Latin America and the Caribbean

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  • Moore, Winston

Abstract

The 1990s were a turbulent time for Latin American and Caribbean countries. During this period, the region suffered from no less than sixteen banking crises. One of the most important determinants of the severity of banking crises is commercial bank liquidity. Banking systems, which are relatively liquid, are better able to deal with the large deposit withdrawals that tend to accompany bank runs. This study provides an assessment of the main determinants of bank liquidity as well as an evaluation of the impact of banking crises on liquidity. The results show that on average, bank liquidity is about 8% less than what is consistent with economic fundamentals during financial crises.

Suggested Citation

  • Moore, Winston, 2009. "How do financial crises affect commercial bank liquidity? Evidence from Latin America and the Caribbean," MPRA Paper 21473, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:21473
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    File URL: https://mpra.ub.uni-muenchen.de/21473/1/MPRA_paper_21473.pdf
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    References listed on IDEAS

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    Cited by:

    1. FERROUHI, El Mehdi & LEHADIRI, Abderrassoul, 2013. "Liquidity Determinants of Moroccan Banking Industry," MPRA Paper 59888, University Library of Munich, Germany.
    2. Jana Lastuvkova, 2015. "Dimensions of liquidity and their factors in the Slovenian banking sector," MENDELU Working Papers in Business and Economics 2015-55, Mendel University in Brno, Faculty of Business and Economics.
    3. Pavla VODOVÁ, 2013. "Liquidity Ratios of Polish Commercial Banks," European Financial and Accounting Journal, University of Economics, Prague, vol. 2013(3).
    4. Pavla Klepková Vodová & Daniel Stavárek, 2015. "Factors Affecting Sensitivity of Czech and Slovak Commercial Banks to Bank Run," Working Papers 0020, Silesian University, School of Business Administration.
    5. Jana Lastuvkova, 2014. "Liquidity management strategies in the Czech banking sector," MENDELU Working Papers in Business and Economics 2014-47, Mendel University in Brno, Faculty of Business and Economics.
    6. Jana Lastuvkova, 2015. "Determinants of the Slovak bank liquidity flows," MENDELU Working Papers in Business and Economics 2015-51, Mendel University in Brno, Faculty of Business and Economics.

    More about this item

    Keywords

    Liquidity; Financial Crisis; Banks;

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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