THE EFFECT OF LIQUIDITY ANALYSIS ON THE PERFORMANCE OF BANKS
Keywords:
Following Liquidity Analysis, Bank Performance, Statutory Liquidity RatioAbstract
The impact of liquidity ratios on commercial banks' financial performance is the main topic of the study. Eleven banks, or around 46% of all the commercial banks listed on the Iraqi Stock Exchange, were employed in the research. The time frame that was used was 2010–2023. The focus was on evaluating the link between the legal liquidity ratio and return on equity (ROE), return on assets (ROA), and net interest margin (NIM) using the available software, EViews V 10. Since the fixed effect model is the most suitable for evaluating the link between independent and dependent variables, it was used to analyse the data. The findings show that the legal liquidity ratio and net interest margin (NIM) have a statistically significant negative connection; that is, a higher liquidity ratio will result in a lower profit margin. Additionally, it has been shown that the employment ratio has a negative, non-significant influence that could not always improve the profit margin. It was determined that financial liquidity and employment ratios directly impact banks' financial performance; hence, effective management of these ratios contributes to increased financial efficiency. pertains to this model; as a result, the research suggests that management enhance its liquidity management procedures and policies in order to attain optimum financial performance by preventing negative effects on return brought on by insufficient liquidity
References
- Prof. Dr. Hassan Karim Al-Dhubhawy, and Ali Amory Faraj. (June 30, 2022). The role of bank liquidity in return and
risk - an analytical study of a sample of Iraqi commercial banks for the period 2005-2019. Al-Ghari Journal of Faculty
of Administration and Economics, pp. 1053-1082.
- Assoc. Prof. Dr. Salah El-Din Mohamed Amin Al-Imam and Maysa Amer Hassan. (27 3, 2022). The impact of bank
liquidity on performance - an analytical study in the Industrial Bank of Iraq. Journal of Administration and Economics,
pp. 125-140.
- Assoc. Prof. Dr. Abdul Khaliq Yassin Zayer Al-Badran, and Muhammad Ahmed Dahi. (26 4, 2015). The traditional
system and the CAMEL system for evaluating the performance of banks (a comparative study in Sumer Commercial
Bank for the period 2007-2013). A semi-annual periodical issued by the College of Administration and Economics /
University of Basra, pp. 75-99.
- Assoc. Prof. Dr. Muhammad Ali Kazim, and researcher Jaafar Jalil Abadi Hassan. (March, 2021). The role of liquidity
in banking performance: a study of a sample of Iraqi commercial banks for the period (2006-2015). Maeen Magazine
- Issue VII, pp. 127-152
- Assoc. Prof. Dr. Laila Abdul Karim Mohammed Al-Hashemi, and Omar Zidan Abdul Karim Al-Rifai. (August, 2022).
Measuring the impact of liquidity risks on the degree of banking safety: an analytical study in a sample of banks
listed on the Iraq Stock Exchange. Al-Riyada Journal of Finance and Business, pp. 104-112.
- Mr. Ali Mohsen Ismail, Dr. Munther Abdul Qader Al-Sheikhli, Mr. Walid Idi Abdul Nabi, Dr. Ahmed Abrihi Ali, Mr.
Mazhar Muhammad Saleh, Dr. Muwaffaq Abdul Hussein Al-Shehayeb, and Dr. Majid Muhammad Hassan Al-Suri.
(2019). Central Bank of Iraq Monetary Policy Report 2019. Central Bank of Iraq, Department of Statistics and
Research, pp. 1-31.
- Mr. Ali Mohsen Ismail Al-Alaq, Dr. Munther Abdul Qader Al-Sheikhly, Mr. Walid Idi Abdul Nabi, Mr. Ihsan Shamran
Al-Yasiri, Dr. Ahmed Ebrihi Ali, Dr. Majed Muhammad Hassan Al-Suri, and Dr. Nawar Daham Matar Al-Zubaidi. (31
, 2017). Financial Stability Report 2017. Central Bank of Iraq Monetary and Financial Stability Section, pp. 1-110.
- Berivan Saleh Abdul Razzaq, and Prof. Dr. Muhammad Madloul Ali. (30 6, 2022). The impact of liquidity on the cash
credit of the Real Estate Bank of Iraq for the period (2004-2020). Journal of Administration and Economics for
Economic, Administrative and Financial Studies - Volume 14-No. 2, pp. 390-403.
- Dr. Ridha Sahib Abu Hamad and Dr. Faeq Meshaal Qaddouri. (2005). Banking Management. Mosul / University of
Mosul: Dar Ibn al-Atheer for printing and publishing.
- Doaa Salah Hadi, and Kadhim Saad Al-Araji. (16 3, 2023). Measuring and analyzing the relationship between cash
liquidity and credit capacity: An applied study of a sample of Iraqi commercial banks for the period (2009-2020).
University of Karbala - College of Administration and Economics, pp. 1-167.
- Samara Yaqouta and Khalil Abdul Qadir. (1 1, 2021). The balanced scorecard and its role in evaluating the
performance of commercial banks - a field study in the agencies of the Bank of Agriculture and Rural Development
for the state of Medea -. Thesis submitted to obtain a doctorate degree in economic sciences, specialization: Finance
and Money - Yahya Fares University in Medea - Faculty of Economics, Commercial and Management Sciences -
Department of Economic Sciences, pp. 1-288.
- Ali Akram Razzaq Al-Araji, and Assoc. Prof. Mustafa Kadhimi Najaf abadi. (September 20, 2022). The impact of cash
liquidity on banking activity - the Commercial Bank of Iraq and the Middle East Bank as a model. Ahl al-Bayt (peace
be upon them), issue 31, pp. 603-628.
- Ghassan Tariq Zahir and Ali Karim Mohammed. (19 6, 2018). Analysis of liquidity, profitability, leverage in light of
banking risk management, Commercial Bank of Iraq, a case study 2005-2015. Al-Muthanna Journal for
Administrative and Economic Sciences, pp. 7-53.
- Assistant Lecturer. Bilal Nouri Saeed Al-Karwi. (29 May, 2021). Evaluation of the profitability of banks using liquidity
indicators - a comparative study between Rafidain and Rasheed banks. Iraqi Journal of Administrative Sciences, pp.
-263.
- Assistant Lecturer. Mithaq Hatif Al-Sada, Assistant Lecturer. Elham Nazim, and Assistant Lecturer. Bilal Nouri Saeed.
(2008). Evaluating banking performance by adopting the analysis of liquidity and profitability ratios, "a comparative
study between Iraqi and Jordanian banks". Journal of the University of Karbala Scientific / Volume VI / Issue One /
Scientific, pp. 119-133.
- Najla Ibrahim Abdul Rahman, and Tahani Owaid Al-Farsi. (30 October, 2020). The impact of liquidity on the
profitability of commercial banks in the Kingdom of Saudi Arabia. Journal of Economic, Administrative and Legal
Sciences, pp. 109-132.
- Abbas, F., Qbal, S., &Aziz, B. (2020, Aug 3). The Role of Bank Liquidity and Bank Risk in Determining Bank Capital:
Empirical Analysis of Asian Banking lndustry. Review of Pacific Basin Financial Markets and Policies, pp. 1-21.
- AL-Ardah, M., & Al-Okdeh, S. K. (2021, June 22). The effect of liquidity risk on the performance of banks: Evidence
from Jordan. Accounting, pp. 217-226.
- Dinh, D. V., & Huyen, V. T. (2024, May 21). "Commercial banks capital structure and performance in Vietnam: Panel
data model approach". LLC"Consulting Publishing Company "Business Perspectives", pp. 125-139.
- Irhamni, F., Auliya, C., Karya, D. F., & Anshori, M. Y. (2022, June 12-14). Financial Performance of Indonesian
Banking Industry: Do Liquidity, Asset Quality and Capital Matter? proceedings of the 7th North American
International Conference on Industrial Engineering and Operations Management, Orlando, Florida, pp. 1-15.
- Jankular, P. (2024, 2). Risk-return Portfolio Level Trade- off for Czech Banks. Prague Economic papers, pp. 187-
- Khalid, M. S., Rashed, M., & Hossain, A. (2019, May). The Impact of Liquidity Risk on Banking Performance: Evidence
from the Emerging Market. Global Journal of Management and Business Research, pp. 1-8.
- NGHIEM, H. Q., PHUNG, H. Q., & PHAM, M. H. (2023, Jun 30). DETERMINANTS OF NET INTEREST MARGIN IN
COMMERCIAL BANKS IN VIET NAM. Journal of Advanced Engineering and Computation, pp. 116-132
Downloads
Published
How to Cite
Issue
Section
License
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
