THE IMPACT OF NET STABLE FUNDING RATIO ON BANK PERFORMANCE AND RISK AROUND THE WORLD

Bowo Setiyono () and Ahmad Maulin Naufa ()
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Bowo Setiyono: Universitas Gadjah Mada
Ahmad Maulin Naufa: Universitas Gadjah Mada

Bulletin of Monetary Economics and Banking, 2020, vol. 23, issue 4, 543-564

Abstract: This study examines whether liquidity, as measured by net stable funding ratio (NSFR), impacts bank performance and risk. Based on an annual panel data set consisting of 2,909 banks from 127 countries, we find that NSFR reduces both performance and risk. These results are uniquely different in the robustness analysis under various settings (non-linear relationships, high versus low NSFR, and conventional versus Islamicbanks). Overall, NSFR implementation brings benefits in the form of risk reduction rather than performance improvement to banks around the world.

Keywords: Net stable funding ratio; Liquidity; Risk; Bank; Performance (search for similar items in EconPapers)
JEL-codes: B26 E52 E58 G21 G28 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:idn:journl:v:23:y:2020:i:4e:p:543-564

DOI: 10.21098/bemp.v23i4.1166

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