Capital regulation, liquidity risk, efficiency and banks performance in emerging economies

Nicholas Addai Boamah, Emmanuel Opoku and Augustine Boakye-Dankwa

Journal of Financial Regulation and Compliance, 2022, vol. 31, issue 1, 126-145

Abstract: Purpose - This study aims to examine the descriptive capabilities of efficiency, liquidity risk and capital risk for the cross-sectional and time-series variations in banks’ performance across emerging economies (EEs). It also examines the impact of the 2008 global financial crisis (GFC) on the effects of capital, liquidity and efficiency on banks’ performance. Design/methodology/approach - The paper adopts a spatial panel model and collects data across 90 EEs. Findings - The study shows that a surge in efficiency and liquidity improves bank performance. In addition, banks that finance credit creation primarily with core deposits perform better. Also, banks in EEs responded to the GFC. The findings show that banks in EEs respond to global events emanating from the developed economies. This indicates that EEs banks are relatively integrated with banks in developed markets. Originality/value - Improvement in profit efficiency and effective liquidity and capital risk management enhance the performance of EEs banks.

Keywords: Emerging markets; Banks’ efficiency; Regulation; Risk; Credit supply; Banking crisis; Banking sector competition; G01; G15; G21; G28; F15 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jfrcpp:jfrc-09-2021-0076

DOI: 10.1108/JFRC-09-2021-0076

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