Bank-Specific and Macroeconomic Determinants of Bank Liquidity Creation: Evidence from MENA Countries

Anas Alaoui Mdaghri and Lahsen Oubdi ()
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Anas Alaoui Mdaghri: EMAA Business School, Agadir, Morocco and National School of Business and Management (ENCG), Ibn Zohr University, Agadir, Morocco
Lahsen Oubdi: National School of Business and Management (ENCG), Ibn Zohr University, Agadir, Morocco

Journal of Central Banking Theory and Practice, 2022, vol. 11, issue 2, 55-76

Abstract: This study measures liquidity creation within a sample of 153 banks operating in 12 Middle Eastern and North African (MENA) countries from 2008 to 2017. We found that these banks created a total of $461.32 billion in liquidity in 2017, approximately 1.51 times the total liquidity created in 2008, mainly driven by commercial banks in Gulf Cooperation Council (GCC) countries. We also conducted an econometric analysis to investigate the internal and external factors affecting bank liquidity creation, applying a Fixed Effects model and the new Method of Moments Quantile Regression (MMQR). The results show that, among bank-specific factors, bank liquidity creation in MENA countries is related to capital, size, bank risk, deposits and profitability whilst market concentration does not appear to play a significant role. Regarding macroeconomic factors, inflation, unemployment, savings and monetary policy explain the variations in bank liquidity creation.

Keywords: bank liquidity creation; bank-specific and macroeconomic determinants; Method of Moments Quantile Regression; MENA region. (search for similar items in EconPapers)
JEL-codes: E44 E50 G21 G28 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:cbk:journl:v:11:y:2022:i:2:p:55-76

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