A Financial Analysis of the Liquidity Creation and the Capital Holdings of Turkish Banks
In this paper, the impact of the amount of bank capital on the bank liquidity creation is explored using a sample of 21 Turkish banks and quarterly data for the period 2010Q1- 2017Q4. Our methodology involves fixed effects panel data estimation techniques and we use lagged independent variables t...
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| Format: | Article |
| Language: | English |
| Published: |
Isarder
2018-09-01
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| Series: | İşletme Araştırmaları Dergisi |
| Subjects: | |
| Online Access: | https://www.isarder.org/2018/vol.10_issue.3_article01_full_text.pdf |
| Summary: | In this paper, the impact of the amount of bank capital on the bank liquidity
creation is explored using a sample of 21 Turkish banks and quarterly data for the
period 2010Q1- 2017Q4. Our methodology involves fixed effects panel data estimation
techniques and we use lagged independent variables to control for endogeneity. Our
findings indicate that the liquidity creation of Turkish banks has dramatically increased
over time and it is primarily driven by large banks. Our results from the regression
analysis indicate that bank liquidity creation is increased under higher levels of capital
for the whole sample. While a higher level of bank capital increases bank liquidity for
small banks, the opposite case occurs for large banks, namely, the created liquidity
decreases by more bank capital. We offer some important policy implications in that
while regulators in the emerging markets impose capital requirements on banks, they
need to consider the impact on liquidity creation of banks of different sizes. |
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| ISSN: | 1309-0712 1309-0712 |