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Social unrest and bank liquidity creation: evidence from MENA banks

Author

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  • Saibal Ghosh

Abstract

Purpose - A host of studies have assessed the determinants of bank liquidity creation, highlighting the relevance of macroeconomic and microeconomic factors. However, whether and how social unrest impacts bank liquidity creation remains a moot issue. To inform this debate, this study aims to exploit bank-level data for Middle East and North Africa (MENA) countries covering the period 2010–2019 to assess the interlinkage between social unrest and bank liquidity creation. Design/methodology/approach - In view of the staggered inception of social unrest across MENA countries, the author uses a difference-in-differences specification to tease out the causal impact. Findings - The findings reveal that the Arab Spring improves liquidity creation after onboarding after confounding factors. This impact differs across conventional and Islamic banks and differs across asset side (market) and liability side (funding) liquidity creation. The evidence also underscores the positive real effects of such liquidity creation on real economic output. Originality/value - This is one of the early studies exploiting a large sample of MENA banks to examine this issue in a systematic manner.

Suggested Citation

  • Saibal Ghosh, 2024. "Social unrest and bank liquidity creation: evidence from MENA banks," Journal of Financial Economic Policy, Emerald Group Publishing Limited, vol. 16(6), pages 762-777, June.
    • Handle: RePEc:eme:jfeppp:jfep-09-2023-0257
    DOI: 10.1108/JFEP-09-2023-0257
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    More about this item

    Keywords

    Liquidity creation; Banking; MENA; Productivity; Arab Spring; D74; G21;
    All these keywords.

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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