Measuring Liquidity Risk Management and Impact on Bank Performance in Iran

Azam Ahmadyan ()
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Azam Ahmadyan : Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran

Journal of Money and Economy, 2017, vol. 12, issue 3, 295-315

Abstract: A bank as a business units needs to have liquid assets which can be easily converted into cash at short notice. Thus the concept of liquidity risk management is important for any commercial banks. The impact of liquidity position in management of banks have remained significant, though very elusive in the process of investment analysis vis-à-vis bank portfolio management. In addition, liquidity risk management affects banking performance. In this paper, according to existing theoretical and empirical literature, the suitable system for measuring liquidity risk management is defined. Then, the effect of liquidity risk management on the profitability and survival of banks has been investigated. For this purpose, a model is estimated using panel data method and the financial statements of banks for the period 2005-2017. The results of the study show that there is a significant relationship between risk management and profitability and bank survivability. As poor liquidity risk management reduces the profitability and survival of banks.

Keywords: Liquidity Risk Management; Survival; Profitability; Panel Data (search for similar items in EconPapers)
JEL-codes: G2 G21 (search for similar items in EconPapers)
Date: 2017
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