Impact of Macroeconomic Variables upon the Banking System Liquidity

Trenca, Ioan; Petria, Nicolae; Corovei, Emilia Anuta

doi:10.1016/s2212-5671(15)01583-x

Cited by 28 publications

(28 citation statements)

References 4 publications

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“…There is no significant relation between interest rates, the share of non-performing loans and the rate of inflation with liquidity quantity in the Slovak Commercial Banks. Trenca et al (2015) in their study on macroeconomic factors impact on liquidity in Greece, Portugal, Spain, Italy, Croatia and Cyprus arrive at the same conclusions as Vodova, with some particularities related to the last period liquidity, public deficit and unemployment. An increase in public deficit will involve increasing bank loans and thus will decrease liquidity.…”

Section: Literature Reviewmentioning

confidence: 60%

The Macroeconomic Factors Impact on Liquidity Risk: The Albanian Banking System Case

Madhi

2017

Eur. j. econ. bus. stud.

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Over the last five years, the Albanian banking system has experienced a deceleration on its activity, considering the recent financial crisis effects. The financial crisis did not propagate direct effects on the Albanian financial system, but indirect effects were visible based on the general slowdown of the foreign markets and public loss of confidence towards the banking system. Also, the foreign remittances decrease and the liquidity shortage of the public played an important role on the capacity to meet the payment obligations (especially on loans). During 2009, the Albanian Central Bank issued a new regulation on liquidity risk evaluation, monitoring and management. The main objective of the regulation was the determination of the minimal evaluation standards of liquidity risk and its effective management by all banks operating on the Albanian territory. The liquidity risk evaluation and monitoring, as suggested also by the literature, does not depend only on internal financial indexes of banks, but it finds its basis also on broader indexes such as macroeconomic indexes. This analysis is effectuated on the impact and importance these factors have on liquidity risk, considering the banking system composed by 13 banks over a period of five years.

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Section: Literature Reviewmentioning

confidence: 60%

The Macroeconomic Factors Impact on Liquidity Risk: The Albanian Banking System Case

Madhi

2017

Eur. j. econ. bus. stud.

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“…Findings of these studies are not common as some studies show positive relationship between liquidity and GDP while other show negative relationship between GDP and liquidity of banks. Choon et al (2013); Bunda and Desquilbet (2008) highlighted positive relationship between GDP and bank liquidity while Valla et al (2006), Dinger (2009), Vodova (2011), and Trenca et al (2015) estimated negative relationships. Sing and Sharma (2016) also claimed that liquidity has significant negative relationship with GDP.…”

Section: Economic Growth and Bank Liquidity Relationshipmentioning

confidence: 99%

“…They supported their findings by stating that banks hold ample resources of liquid assets to maintain economic stability and flow of liquidity in the system when inflation rate falls and they keep less liquid assets when inflation is rises. Trenca et al (2015) also studied the impact of macroeconomic factors on liquidity reserves of banks. Findings of their study revealed negative relationship between inflation and liquidity resources of banks.…”

Section: Inflation and Bank Liquidity Relationshipmentioning

confidence: 99%

Determinants of Liquidity Considering Role of Market Competition; Evidence from Pakistan’s Banking Sector

Rafique

Adeel

Akhtar

et al. 2020

sbsee

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Current study empirically analyzes bank specific factors and macroeconomic factors that determine the liquidity reserves of banks functioning in Pakistan. To highlight the association, current study performed random effects estimates on a data set of 20 banks from 2006 to 2016. Bank specific factors include bank size, capital and credit Risk. GDP and Inflation are the macroeconomic factors that were considered. Market competition has been measured through HHI. Based on panel data analysis, current study suggests that bank specific factors (except capital), macroeconomic factors and market competition significantly affect liquidity reserves of banks in Pakistan. These factors include bank size, credit risk, market competition, GDP and inflation. In addition, bank size, credit risk, GDP and Inflation revealed a negative effect on bank liquidity. On the other hand, market competition revealed a positive effect on bank liquidity. Capital showed an insignificant effect on bank liquidity.

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“…In the banking industry, the allocation of investment resources to economic activity through loans and bank credit is part of the investment activity of banks, whose returns are influenced by macroeconomic variables such as GDP fluctuations, oil revenue fluctuations, inflation growth rates, and interest rate changes, and may be associated with many uncertainties. Studies by Trenca et al (2005) showed that disregarding macroeconomic uncertainties can have a major impact on the banking system and ultimately lead to bank failures and economic crises.…”

Section: Introductionmentioning

confidence: 99%

Assessing Risk Factors Affecting Banking System Credit Portfolio Returns in Iran Using Agent-Based Models Approach

2020

jcr

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Agent-based models were introduced into the investment literature by Sharpe in the 1960s with the design of the single-index model and then expanded with the design of multi-index models. From this perspective, the macroeconomic affects ROI through two categories including general and specific risk factors. The present study tested the impact of the variance of changes in the risk factors affecting Iran's banking system credit portfolio returns based on the same approach over the period 2004-2018 using the OLS technique. According to the results of this test, among the general and specific risk factors, the variance of changes in GDP growth rate, oil revenues, real interest rate, and NPL ratio had a direct relationship with the growth rate of the banking system credit portfolio returns and the inflation rate had an inverse relationship with it. Besides, the results indicated that all risk factors affected the banking system's credit portfolio returns after a lag period.

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Impact of Macroeconomic Variables upon the Banking System Liquidity

Cited by 28 publications

References 4 publications

The Macroeconomic Factors Impact on Liquidity Risk: The Albanian Banking System Case

The Macroeconomic Factors Impact on Liquidity Risk: The Albanian Banking System Case

Determinants of Liquidity Considering Role of Market Competition; Evidence from Pakistan’s Banking Sector

Assessing Risk Factors Affecting Banking System Credit Portfolio Returns in Iran Using Agent-Based Models Approach

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