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GCC banks liquidity and financial performance: does the type of financial system matter?

Author

Listed:
  • Zaroug Bilal

    (Dhofar University)

  • Abdullah AlGhazali

    (Dhofar University)

  • Ahmed Samour

    (Dhofar University)

Abstract

This study examines whether the type of financial structure in the GCC influences the relationship between liquidity risk and banks’ performance from 2007 to 2021. By employing fixed effects and fully modified ordinary least squares (FMOLS), we find that the impact of liquidity risk on bank profitability differs among bank-based and market-based systems. Specifically, the results show that the profitability of banks operating in bank-based countries is positively influenced by the liquidity risk compared to their counterparts. The study also demonstrates that the global financial crisis increases banks’ profitability in the bank-based financial system. Furthermore, the results show that gross domestic product growth (GDPG) determines banks’ financial profitability in the banks-based market. This study offers some important implications for policymakers to consider the type of financial system to stimulate bank stability.

Suggested Citation

  • Zaroug Bilal & Abdullah AlGhazali & Ahmed Samour, 2024. "GCC banks liquidity and financial performance: does the type of financial system matter?," Future Business Journal, Springer, vol. 10(1), pages 1-15, December.
    • Handle: RePEc:spr:futbus:v:10:y:2024:i:1:d:10.1186_s43093-024-00348-y
    DOI: 10.1186/s43093-024-00348-y
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    More about this item

    Keywords

    Liquidity risk; Banks; Financial performance; Financial system; COVID-19; GCC;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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