IDEAS home Printed from https://ideas.repec.org/a/eme/jfcpps/jfc-08-2023-0198.html
   My bibliography  Save this article

Nexus of liquidity creation, profitability and bank stability with the moderating role of corruption: an empirical analysis

Author

Listed:
  • Misbah Javid
  • Khurram Ejaz Chandia
  • Qamar Uz Zaman Malik

Abstract

Purpose - This study aims to investigate the impact of liquidity creation (LC) on the profitability and stability of banks while considering the moderating role of corruption. Design/methodology/approach - Panel data from 23 conventional banks and five Islamic banks in Pakistan spanning from 2008 to 2021 were used for analysis. The study used fixed effect and random effect models, along with the generalized method of moments estimation to ensure robustness of the results. Findings - The study reveals a negative relationship between LC and banking profitability, but a positive association with banking stability. Additionally, corruption is found to play a moderating role in the relationship between LC, profitability and stability in the banking sector of Pakistan. Research limitations/implications - The findings have practical implications for bank managers and investors, emphasizing the negative relationship between LC and profitability in Pakistan. Moreover, the study highlights the significant impact of corruption on bank performance, which can guide policymakers in formulating strategies to strengthen the banking sector and prevent financial turmoil in the future. Originality/value - This study makes a significant contribution to the existing literature by examining the moderating role of corruption in the relationship between LC, profitability and stability in both conventional and Islamic banks.

Suggested Citation

  • Misbah Javid & Khurram Ejaz Chandia & Qamar Uz Zaman Malik, 2023. "Nexus of liquidity creation, profitability and bank stability with the moderating role of corruption: an empirical analysis," Journal of Financial Crime, Emerald Group Publishing Limited, vol. 31(6), pages 1332-1361, December.
    • Handle: RePEc:eme:jfcpps:jfc-08-2023-0198
    DOI: 10.1108/JFC-08-2023-0198
    as

    Download full text from publisher

    File URL: https://www.emerald.com/insight/content/doi/10.1108/JFC-08-2023-0198/full/html?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://www.emerald.com/insight/content/doi/10.1108/JFC-08-2023-0198/full/pdf?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1108/JFC-08-2023-0198?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:jfcpps:jfc-08-2023-0198. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Emerald Support (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.