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Capital regulation, liquidity risk, efficiency and banks performance in emerging economies

Author

Listed:
  • Nicholas Addai Boamah
  • Emmanuel Opoku
  • Augustine Boakye-Dankwa

Abstract

Purpose - This study aims to examine the descriptive capabilities of efficiency, liquidity risk and capital risk for the cross-sectional and time-series variations in banks’ performance across emerging economies (EEs). It also examines the impact of the 2008 global financial crisis (GFC) on the effects of capital, liquidity and efficiency on banks’ performance. Design/methodology/approach - The paper adopts a spatial panel model and collects data across 90 EEs. Findings - The study shows that a surge in efficiency and liquidity improves bank performance. In addition, banks that finance credit creation primarily with core deposits perform better. Also, banks in EEs responded to the GFC. The findings show that banks in EEs respond to global events emanating from the developed economies. This indicates that EEs banks are relatively integrated with banks in developed markets. Originality/value - Improvement in profit efficiency and effective liquidity and capital risk management enhance the performance of EEs banks.

Suggested Citation

  • Nicholas Addai Boamah & Emmanuel Opoku & Augustine Boakye-Dankwa, 2022. "Capital regulation, liquidity risk, efficiency and banks performance in emerging economies," Journal of Financial Regulation and Compliance, Emerald Group Publishing Limited, vol. 31(1), pages 126-145, June.
    • Handle: RePEc:eme:jfrcpp:jfrc-09-2021-0076
    DOI: 10.1108/JFRC-09-2021-0076
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    More about this item

    Keywords

    Emerging markets; Banks’ efficiency; Regulation; Risk; Credit supply; Banking crisis; Banking sector competition; G01; G15; G21; G28; F15;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • 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
    • F15 - International Economics - - Trade - - - Economic Integration

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