The Effect of Credit Risk as a Mediator Between Liquidity and Capital Adequacy on Bank Performance in Banking Companies Listed on the Idx (original) (raw)
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Purpose: The aim of the study is to find out relationship between liquidity risk and bank performance. This study has been conducted based on secondary data collected from the annual reports of selected banks. Design: This is a causal study where dependent variable is bank performance (BP) which is the combination of two factors namely return on assets (ROA) and return on equity (ROE). Independent variables are current ratio (CR), loan to deposit ratio (LDR) and liquid asset to total asset ratio (LATAR). The study has been conducted on secondary data that has been collected from the annual reports of the banks. Multiple regression analysis has been applied to actualize research objectives. Findings: The study shows that there is no significant relationship between current ratio and bank performance, on the other hand effect of loan to deposit ratio and liquid asset to total asset ratio have statistically significant relations with bank performance. The study identifies negative rela...
Sarhad Journal of Management Sciences, 2019
Risk management became an important dilemma in the banking literature and has gained consideration since the financial crisis of 2007-08 which brought numerous challenges for most organizations. More than 325 banks' failure was reported in the United States during the worldwide financial crisis. The high number of banks failures needs to evaluate the risk management efficiency of banking institutions of Pakistan. In this study, we used the PVAR model and Simultaneous equation approach to examine the link between Liquidity Risk and Credit Risk and its influence on banks' performance working in Pakistan. The panel data was collected from 33 banking institutions between the period 2008-2018. The results revealed that Credit Risk and Liquidity Risk are not interrelated with each other. However, the two risks independently influence the banks' performance and their relative interaction plays a major role in the instability of the banking sector. The findings form the foundation for recent regulatory exertions to better understand the two types of risks and to strengthen the joint management of both liquidity risk and credit risk.
The Journal of Internet Banking and Commerce, 2018
Liquidity risk Management is fundamental to sound banking practice. No doubt today all banking institutions face countless risks such as liquidity risk which can cause failure of a banking system. Therefore, a proper risk management technique is necessary for the existence and the growth of banks. Therefore, the purpose of this study is to examine the effectiveness of risk management practice that is liquidity risk their impact on performance or Profitability of Islamic and conventional banks. Liquidity risk is measured by loan to deposit ratio, cash to total asset ratio. Performance measure proxies were ROE and ROA for both Islamic and Conventional banks. Data are panel from 2011-2015 which is taken from the financial reports of Islamic and conventional banks. Regression analysis has been used to extract the results. The result of this study concluded that how this liquidity risk will affect the bank performance in conventional and Islamic banks.
EFFECT OF LIQUIDITY MANAGEMENT ON BANK PERFORMANCE
FINANCE , 2021
Liquidity management and profitability are very important issues in the growth and survival of businesses including financial institutions and the ability to handle trade-off between the two is a source of concern for financial managers. Hence, this research examines the relationship between liquidity management and bank performance using secondary data from the published annual reports of five (5) sampled Deposit Money Banks in Nigeria for a period of ten years (2009-2018). The proxies for liquidity management include loan to deposit ratio, loan to assets ratio, liquid ratio, while return on assets was the proxy for profitability. Data was analyzed using Auto Regressive Distributed Lag (ARDL) and results from the study showed that there is a negative and significant relationship between loan to deposit ratio with p-value 0.0021 and return on assets (ROA), a positive and significant relationship between loan to asset ratio with p-value 0.0005 and return on assets (ROA) and a positive and insignificant relationship between liquid ratio with p-value 0.1808 and return on assets (ROA). The study concludes that, there is a significant and positive relationship between liquidity management and profitability of banks in Nigeria. It is recommended that banks should always endeavour to administer their credits effectively by adhering strictly to rules on granting of credit.
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