Liquidity Creation, Investment, and Growth

Beck, Thorsten; Döttling, Robin; Lambert, Thomas; Dijk, Mathijs A. Van

doi:10.2139/ssrn.3634574

Cited by 11 publications

(4 citation statements)

References 95 publications

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“…Chatterjee (2018) determined that liquidity creation of banks contains indicators of future recessions. Some academics found that liquidity creation has a positive effect to economic growth (Berger & Sedunov, 2017;Beck et al, 2020) Chu & Chu (2020) found a non-linear relationship between financial liquidity and economic growth. Thus, the relationship between liquidity and economic growth is a complex issue and may have different behaviors in different economies.…”

Section: Literature Reviewmentioning

confidence: 99%

Does Kyrgyz banking system liquidity provide economic growth?

Hoxha¹,

Atabaev²,

Marlenova³

et al. 2022

Journal of International Studies

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The relationship between the liquidity ratio, the economy and the banking system of a country is a popular subject among academics. This research aims to understand this connection for Kyrgyzstan, a developing economy. The Vector Auto Regression approach was used to trace the association of liquidity ratio to loan and deposit volumes, interest income, net interest income, treasury bill volume, and gross domestic product based on the quarterly data. The data was obtained from various publications of the National Bank of the Kyrgyz Republic. The primary literature indicates that bank liquidity has an inverse correlation not only with bank profitability but also with economic growth. The findings confirm a similar relationship for Kyrgyzstan. Furthermore, liquidity has a positive relationship to treasury bills volume, but a negative correlation to economic growth. However, there was no significant correlation between the liquidity ratio and deposit volumes. Therefore, this paper found that high liquidity ratio of the Kyrgyz banking system negatively effects both the profitability of the banks and economic growth.

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Section: Literature Reviewmentioning

confidence: 99%

Does Kyrgyz banking system liquidity provide economic growth?

Hoxha¹,

Atabaev²,

Marlenova³

et al. 2022

Journal of International Studies

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show abstract

“…Capital controls are measures adopted by governments to regulate the out ow or in ow of capital for nancial stability outcomes or as a macroeconomic crisis control mechanism (Baradwaj et al 2016; Beck et al, 2022). This suggests that bank liquidity is in uenced by capital control policies of a country.…”

Section: Introductionmentioning

confidence: 99%

“…This suggests that bank liquidity is in uenced by capital control policies of a country. Trade and liberalization facilitate capital ows into a country, and can also facilitates the transfer of international banking crises (Baradwaj et Studies show that banks do not operate in a vacuum but within a framework of institutional structures (Beck et al, 2022;Kladakis et al, 2022). Empirical studies indicate that strong institutions shape economic entities behaviour and foster economic development by enhancing oversight function (Khan et al 2020;Zakaria et al 2019; Baradwaj et al 2016).…”

Section: Introductionmentioning

confidence: 99%

Institutions, Capital control Policy, and Liquidity Creation in Sub- Saharan Africa

Bawuah

2022

Preprint

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The paper examines the role of institutional quality in the relationship between capital control policy and bank liquidity creation in Sub-Saharan Africa. The paper uses international dataset of 63 banks in twenty (20) Sub-Saharan Africa countries from 2007–2019. The paper adopts panel fixed effect regression model for the estimation. The results indicate that institutional quality and capital control policy have direct positive impact on banks liquidity creation. The results further indicate that institutional quality plays positive and significant role in the relationship between capital control policy and bank liquidity creation. Regulatory capital, bank capital and bank size increase banks liquidity creation. However, floating exchange rate regime, bank risk and inflation do not increase bank liquidity creation.

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“…In a follow up study, Berger and Bouwman 25 emphasize the importance of a comprehensive liquidity creation measure and propose measure that considers items from both asset and liabilities sides and on -and off-balance sheet items. This comprehensive liquidity creation measure is often used in subsequent studies that are analyzing liquidity creation in developed countries as well as emerging countries (See e.g., Pana et al 26 ; Horváth et al 27 ; DeYoung and Huang 28 ; Berger and Bouwman 29 ; Fungácová et al 30 ; Beck et al 31 ).…”

Section: Introductionmentioning

confidence: 99%

Aggregate Liquidity Creation of Islamic Banks in Turkey

Akin

Ozsoy

2021

Marmara Üniversitesi İktisadi Ve İdari Bilimler Dergisi

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This paper provides a detailed analysis of aggregate liquidity created by Islamic (participation) banks in Turkey. Using quarterly regulatory dataset for the period of 2010-2017 and applying Berger and Bouwman4 1 framework to measure liquidity creation, we document that the liquidity created by Turkish Islamic (participation) banks has tripled (in inflation adjusted terms) in our sample period. Furthermore, we find that Islamic banks have created liquidity both on and off their balance sheets. Finally, we observe that Turkish Islamic banks have been creating more liquidity with their liabilities than their assets. Despite the continuous upward trend in aggregate liquidity created by Turkish Islamic banks, their loan-to-asset and deposit-to-asset ratios have been declining in our sample period, which suggests that the observed trend has been driven by extensive margin (i.e., bank sizes growing in real terms) rather than the intensive margin (banks creating liquidity more effectively).

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Liquidity Creation, Investment, and Growth

Cited by 11 publications

References 95 publications

Does Kyrgyz banking system liquidity provide economic growth?

Does Kyrgyz banking system liquidity provide economic growth?

Institutions, Capital control Policy, and Liquidity Creation in Sub- Saharan Africa

Aggregate Liquidity Creation of Islamic Banks in Turkey

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