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Liquidity Dynamics of Banks in Emerging Market Economies

Author

Listed:
  • Tafirei Mashamba

    (Great Zimbabwe University, Masvingo, Zimbabwe and University of South Africa, Pretoria, South Africa)

Abstract

This study examines the liquidity dynamics of banks in emerging market economies. Using annual data of 91 commercial banks from 11 countries, the study established that banks in emerging markets have target liquidity ratios they pursue and partially adjust due to market frictions. Overall, risk aversion and prudence play a significant role in explaining the liquidity dynamics by banks in emerging market economies.

Suggested Citation

  • Tafirei Mashamba, 2022. "Liquidity Dynamics of Banks in Emerging Market Economies," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 11(1), pages 179-206.
    • Handle: RePEc:cbk:journl:v:11:y:2022:i:1:p:179-206
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    File URL: http://www.cbcg.me/repec/cbk/journl/vol11no1-8.pdf
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    References listed on IDEAS

    as
    1. Guillermo Alger & Ingela Alger, 1999. "Liquid Assets in Banks: Theory and Practice," Boston College Working Papers in Economics 446, Boston College Department of Economics.
    2. Anginer, Deniz & Demirguc-Kunt, Asli & Huizinga, Harry & Ma, Kebin, 2018. "Corporate governance of banks and financial stability," Journal of Financial Economics, Elsevier, vol. 130(2), pages 327-346.
    3. Ali Awdeh, 2019. "Monetary Policy and Economic Growth in Lebanon," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 8(2), pages 147-171.
    4. Sarawan Angklomkliew & Jason George & Frank Packer, 2009. "Issues and developments in loan loss provisioning: the case of Asia," BIS Quarterly Review, Bank for International Settlements, December.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Anas Alaoui Mdaghri & Lahsen Oubdi, 2022. "Bank-Specific and Macroeconomic Determinants of Bank Liquidity Creation: Evidence from MENA Countries," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 11(2), pages 55-76.
    2. Wahida Ahmad & Nur Hazimah Amran, 2023. "Non-linear Panel Data Liquidity Model of Islamic and Conventional Banks," Information Management and Business Review, AMH International, vol. 15(4), pages 316-325.

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    More about this item

    Keywords

    bank liquidity; liquidity dynamics; commercial banks; emerging markets; GMM.;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G19 - Financial Economics - - General Financial Markets - - - Other
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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