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Assessing the factors affecting the liquidity risk in Jordanian commercial banks: a panel data analysis

Author

Listed:
  • Nusiebeh Nahar Falah Alrwashdeh
  • Rizwan Ahmed
  • Muhammad Hassan Danish
  • Qasim Shah

Abstract

One of the main purposes of banks' risk management is to control credit and liquidity risk which are the main sources of risk. This research explores factors affecting liquidity risk of commercial banks operating in Jordan, spanning from 2003 through 2017. The sample of the study includes all commercial banks by employing pooled OLS and panel 2SLS econometric techniques. Findings of the study show that bank size, return on assets (ROA), capital adequacy ratio (CAR), risk, non-performing loans (NPL), T-equality and T-liability have a positive impact on liquidity risk. While return on equity (ROE) shows the negative and significant impact on the liquidity risk. This study suggests that authorities should trace and monitor the determined internal factors that have a negative impact on the liquidity of banks to minimise bank run chances.

Suggested Citation

  • Nusiebeh Nahar Falah Alrwashdeh & Rizwan Ahmed & Muhammad Hassan Danish & Qasim Shah, 2023. "Assessing the factors affecting the liquidity risk in Jordanian commercial banks: a panel data analysis," International Journal of Business Continuity and Risk Management, Inderscience Enterprises Ltd, vol. 13(1), pages 84-99.
    • Handle: RePEc:ids:ijbcrm:v:13:y:2023:i:1:p:84-99
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