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Optimizing Bank Liquidity In Central And Eastern Europe

Author

Listed:
  • Ionica Munteanu (Costache)

    (Alexandru Ioan Cuza University Iasi, contact: 0040751340667)

Abstract

This research paper responds to the current international concern in bank liquidity and offers a model for the optimization of the bank liquidity level, by identifying the marginal impact of the bank liquidity ratio on bank profitability. The non-linear relationship between these two variables is validated through the GMM procedure, on a panel of Eastern and Central European commercial banks over the period 2003-2010. The optimal level of bank liquidity resulted after getting the maximum condition for return on equity and return on assets, as measures of profitability, enhances the recent financial crisis effects.

Suggested Citation

  • Ionica Munteanu (Costache), 2013. "Optimizing Bank Liquidity In Central And Eastern Europe," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 11, pages 83-90, June.
  • Handle: RePEc:aic:revebs:y:2013:i:11:munteanui
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    References listed on IDEAS

    as
    1. Berger, Allen N, 1995. "The Relationship between Capital and Earnings in Banking," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 27(2), pages 432-456, May.
    2. Demirguc-Kunt, Asli & Huizinga, Harry, 2000. "Financial structure and bank profitability," Policy Research Working Paper Series 2430, The World Bank.
    3. Delis, Manthos D & Papanikolaou, Nikolaos I, 2009. "Determinants of bank efficiency: Evidence from a semi-parametric methodology," MPRA Paper 13893, University Library of Munich, Germany.
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    5. R. Alton Gilbert, 1990. "Market discipline of bank risk: theory and evidence," Review, Federal Reserve Bank of St. Louis, issue Jan, pages 3-18.
    6. Goddard, John & Molyneux, Phil & Wilson, John O S, 2004. "Dynamics of Growth and Profitability in Banking," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 36(6), pages 1069-1090, December.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    bank liquidity; profitability; optimum; marginal impact; non-linear regression;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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