Determinants of banks liquidity: evidence from OIC countries
Journal of Economic and Administrative Sciences
ISSN: 1026-4116
Article publication date: 20 November 2017
Abstract
Purpose
Specifically, the purpose of this paper is to identify the key factors affecting banks’ liquidity in developing/less-developing countries.
Design/methodology/approach
In this paper, the author uses the ordinary least-square fixed effect model on an unbalanced panel data set of all conventional banks (686 banks) operating in the organization of Islamic cooperation countries over the period 1989-2008.
Findings
The estimation results show that all the determinants have statistically significant relationship with liquidity (except for concentration) but with different signs. On the one hand, capital ratio, foreign ownership, credit risk, inflation rate, monetary policy and deposit insurance negatively affected banks’ liquidity, while on the other hand, efficiency, size, off-balance sheet activities, market capitalization and concentration have a positive link with banks’ liquidity.
Originality/value
According to the best of author’s knowledge, this is the first empirical study to investigate the determinants of banks liquidity in developing/less-developing countries using a large sample of banks (686 banks) and for long period (19 years).
Keywords
Citation
Al-Harbi, A. (2017), "Determinants of banks liquidity: evidence from OIC countries", Journal of Economic and Administrative Sciences, Vol. 33 No. 2, pp. 164-177. https://doi.org/10.1108/JEAS-02-2017-0004
Publisher
:Emerald Publishing Limited
Copyright © 2017, Emerald Publishing Limited