The determinants of liquidity risk of commercial banks in Vietnam

Tran, Tu Thi Thanh; Nguyen, Yen T.; Nguyễn, Thủy Thu; Tran, Long Phi

doi:10.21511/bbs.14(1).2019.09

Cited by 10 publications

(4 citation statements)

References 4 publications

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“…In Vietnam, Tran et al [2019] explored data from 35 banks covering 2010-2015 to determine factors that influence liquidity risk. Using OLS as analytical tool, the study indicated that total loan to capital ratio, debt to capital ratio, loss provision to loan ratio and long-term lending rate have an indirect and significant relationship with liquidity risk.…”

Section: Review Of Related Empirical Studiesmentioning

confidence: 99%

“…Some prior studies, such as Masood and Ashraf [2012], Vodova [2012], Cucinelli [2014], Jedidia and Hamza [2015], Milic and Solesa [2017], Assfaw [2019] and Tran et al [2019] indicate that liquidity in the financial sector is influenced by both internal and external factors. The internal factors are peculiar and within the control of bank management while external factors are exogenously determined.…”

Section: Independent Variablesmentioning

confidence: 99%

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Determinants of Liquidity Management: Evidence from Nigerian Banking Sector

Kajola

Sanyaolu

Alao

et al. 2021

Vestnik Volgogradskogo Gosudarstvennogo Universiteta. Ekonomika

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The study examined the determinants of liquidity management in twelve Nigerian banks during 2009–2018. Liquidity ratio (LQR) and deposit to asset ratio (DAR) were used as surrogates for liquidity management. As the potential liquidity management determinant indicators, five bank-specific variables (capital adequacy, size, asset quality, profitability and deposit growth) and three macroeconomic variables (GDP growth rate, inflation rate and interest rate) were used as proxies. Results from balanced fixed effects least square regression analytical technique show that size, profitability, GDP growth rate and inflation rate are important liquidity determinants in Nigerian banks. Specifically, bank size has a positive and significant influence on LQR, while GDP growth rate and inflation rate exhibit a negative and significant relationship with LQR. It further reveals a positive and significant relationship between profitability (ROA) and DAR. It is recommended that banks’ management should focus attention on both bank-specific (size and profitability) and macroeconomic (GDP growth and inflation rate) factors when deciding appropriate liquidity management strategy to be adopted. These four variables have the capacity to influence the profitability, sustainable growth and survival of banks operating in a volatile business environment such as Nigeria.

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Section: Review Of Related Empirical Studiesmentioning

confidence: 99%

Section: Independent Variablesmentioning

confidence: 99%

Determinants of Liquidity Management: Evidence from Nigerian Banking Sector

Kajola

Sanyaolu

Alao

et al. 2021

Vestnik Volgogradskogo Gosudarstvennogo Universiteta. Ekonomika

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show abstract

“…The study also indicated a positive link between the size and liquidity risk of IBs, implying that the larger the IBs, the greater their short-term liquidity risk. Examining the determinants of liquidity risk of Vietnamese banks revealed that a larger loan size is linked with higher liquidity risk (Tran et al, 2019). An assessment of the effect of securitization on the liquidity risks of Italian banks during the financial crisis revealed that securitization positively and significantly impacted bank liquidity risk prior to and at the time of the crisis (Battaglia & Mazzuca, 2014).…”

Section: Literature Reviewmentioning

confidence: 99%

Determinants of liquidity risk: Empirical evidence from Indian commercial banks

Antony

2023

Banks and Bank Systems

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Liquidity risk is a significant financial threat that must be handled carefully. Underestimation or mismanagement of liquidity risk may lead to severe financial losses or even bank failures. Therefore, timely and adequately estimating liquidity risk and examining factors that affect liquidity risk are essential. On that account, this paper aims to examine the determinants of liquidity risk for Indian commercial banks from 2013 to 2022. For this purpose, the study has employed a panel data regression model with pooled OLS, fixed effect, and random effect methods and has considered bank-specific and macroeconomic variables. The findings show that liquidity risk is affected by both bank-specific variables and macroeconomic variables. Bank-specific variables, such as bank age, have a negative impact on liquidity risk at the 1 percent significance using pooled OLS, FE, and RE models. In contrast, bank size and bank capitalization positively impacted liquidity risk. However, the operational efficiency of banks was found to have no significant impact on liquidity risk using both the liquid asset to total assets ratio and the loan to deposit ratio. In addition, the results show that macroeconomic variables such as GDP and inflation have a positive impact on liquidity risk. The study’s findings are expected to assist various stakeholders in making appropriate policies, decisions and managing their liquidity risk.

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“…The study by Tran, Nguyen, and Long (2019) was carried out with the purpose to identify the factors that explain the liquidity of commercial banks in the banking system of Vietnam between the years of 2010 and 2015. The OLS regression method was used for the analysis, and it was found that the interbank market assists commercial banks in improving their liquidity; the higher the risk of liquidity, the larger the size of the loan; effective credit risk management has a positive impact on the management of liquidity risk; and the long-term interest rate has a negative relationship with the liquidity of commercial banks.…”

Section: Recapitalization and Its Impact On Liquidity Position Of Com...mentioning

confidence: 99%

Recapitalization and Its Impact on Liquidity Position of Commercial Bank: Evidence from Nepal

Ananta,

Nepal,

Acharya

et al. 2022

ijfirm

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Purpose: This paper intends to analyze the impact of recapitalization on liquidity position spanning 10 years of monthly time series data from commercial banks in Nepal from July 2012 to April 2022, including the 5 years preceding and following the recapitalization period. Design/Methodology/Approach: The paper examines the relationship between recapitalization and liquidity among commercial banks in Nepal using the Ordinary Least Squares method. The independent variable in the analysis is recapitalization, as measured by the growth in total capital of commercial banks, while the dependent variable is liquidity, as measured by the CD ratio. The study also controls for other factors, including the interest rate of loans, interbank rate, and growth in total assets of commercial banks, and includes a dummy variable for policy changes on capital and CD ratio. Findings:The results of this study demonstrate that recapitalization is positively associated with banks' risk-taking capacity and lending ability, and this relationship is supported by trends observed in Nepal. The study also finds that lending has increased in Nepal due to both the impact of recapitalization and the COVID-19 pandemic. Practical implications: This paper provides valuable insights for economic development, with findings on the impact of recapitalization on liquidity that can be used by banks, financial institutions, and regulators for policy-making and financial stability. Originality value: This research fills a gap in the existing literature by examining the impact of recapitalization on the liquidity of commercial banks, a topic that has not been previously explored in Nepal. It is necessary to investigate this relationship in order to understand how recapitalization affects liquidity.

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The determinants of liquidity risk of commercial banks in Vietnam

Cited by 10 publications

References 4 publications

Determinants of Liquidity Management: Evidence from Nigerian Banking Sector

Determinants of Liquidity Management: Evidence from Nigerian Banking Sector

Determinants of liquidity risk: Empirical evidence from Indian commercial banks

Recapitalization and Its Impact on Liquidity Position of Commercial Bank: Evidence from Nepal

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