Bank Compliance Risk and Liquidity Creation

• Main Authors: Tzu-Chien Sun, 孫子茜
• Other Authors: Horace Chueh
• Format: Others
• Language: zh-TW
• Published: 2015
• Online Access: http://ndltd.ncl.edu.tw/handle/52684595682150545382

碩士 === 國立高雄第一科技大學 === 金融系碩士班金融組 === 104 === We argue that the compliance risk events would injure reputation of banks and decrease their ability of liquidity creation. A sample which consists of 31 banks from Taiwan over the period 2004 to 2014 is used to test the proposition. Indicators from Berger and Bouwman (2009) adapted by Chueh et al. (2013; 2014) are used to measure liquidity creation. Compliance risk is measured by the number of compliance risk events reported on the news from TEJ database. Dynamic panel data model is employed to test the relationship between compliance risk events and liquidity creation. The result shows that banks with more compliance risk events have significantly lower liquidity creation and small banks reducing more. It means that compliance risk events hurt banks’ ability of liquidity creation. In addition, the evidence also documents that bank capital, asset size, earnings volatility, inside directors, and revenue diversification can affect liquidity creation.