2019

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Impact of Macroeconomic and Bank Specific Factors on Liquidity of Commercial Banks in Pakistan
(UMT.Lahore, 2019-10-19) Muhammad Waqas Awan
Financial system stability has been gaining crucial consideration on both, national and international level in terms of structural, institutional and macroeconomic aspects. The money as a medium of exchange and bank as an intermediary cannot be comprehend by visualizing a world without them. It can be observed that old modalities of banking system have been replaced by many innovations in the new millennium. In order to evaluate the soundness and steadiness of a banking sector, it is considered imperative to associate banking system with its liquidity position. Therefore, this study is conducted to determine the influence of bank specific and macro environmental variables on the liquidity of commercial banks in Pakistan. The data is taken from 20 commercial banks over the period 2009 to 2018. Different panel data regression models are used. The study found that leverage (LEV) and capital adequacy ratio (CAR) have negative but significant impact on the liquidity of the banks. Moreover, exchange rate (FER) found to have positive and significant effect on the liquidity of the commercial banks. Furthermore, there is insignificant relation of asset size (SIZE), government deficit financing (GDF) and inflation rate (INF) with the bank‟s liquidity.