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Eltweri, A, Sawan, N, Al-Hajaya, K and Badri, Z (2024) The Influence of Liquidity Risk on Financial Performance: A Study of the UK’s Largest Commercial Banks. Journal of Risk and Financial Management, 17 (12). ISSN 1911-8066
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Abstract
The Basel III regulations turned the banking industry around worldwide and created new challenges for banks’ financial stability, particularly in liquidity management. As the demand for compliance with the rules started to grow, the inability of banks worldwide to meet the Basel III requirements about liquidity shifted the way they work. This paper highlights the complex relationship between liquidity and bank profitability in the post-Basel III era. Based on market presence and influence, 10 publicly traded UK commercial banks were selected for 2015–2021. Panel data, using FGLS regression models, were tested to elaborate in detail how the liquidity risk indicators determine banks’ performance, as measured by different profitability indicators. The findings were diversified: some showed that the relationship between liquidity risk indicators and bank profitability is contingent upon the interaction of several dimensions that range from the internal aspects of the banks themselves to general macroeconomic factors. This study provides vital insights into the current literature on risk management, especially about liquidity risks and their effect on bank performance. The findings of this study contribute meaningfully to the knowledge base for banks, regulators, and policymakers. This will contribute to better decision-making, financial stability, and long-term development within the UK’s banking industry.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | Generic health relevance |
| Subjects: | H Social Sciences > HF Commerce > HF5001 Business H Social Sciences > HG Finance |
| Divisions: | Liverpool Business School |
| Publisher: | MDPI |
| SWORD Depositor: | A Symplectic |
| Date Deposited: | 08 Jan 2025 11:10 |
| Last Modified: | 08 Jan 2025 11:15 |
| DOI or ID number: | 10.3390/jrfm17120580 |
| URI: | https://researchonline.ljmu.ac.uk/id/eprint/25204 |
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