The impact of CBDC adoption on bank liquidity risk: evidence from the global banking sector

Dinh Trung Nguyen, Minh Ngoc Nguyen and Kim Thanh Duong

Applied Economics Letters, 2025, vol. 32, issue 2, 193-198

Abstract: This article examines whether and how the adoption of CBDC influences bank liquidity risk. Using a sample of 804 listed commercial banks from 47 countries during the 2010–2021 period, we find that further stages of CBDC adoption subject banks to greater liquidity risk as indicated by higher bank financing gap ratio. The result still holds through a series of robustness checks, including when we employ bank liquidity creation measure to more comprehensively capture the level of bank liquidity, or when we use two-step system GMM to mitigate endogeneity concern. Further analyses show that this adverse impact of CBDC adoption on bank liquidity is driven by the reduction in banks’ core deposits. Our results provide important policy implications for countries considering to implement a CBDC project.

Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/13504851.2023.2259595 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:apeclt:v:32:y:2025:i:2:p:193-198

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RAEL20

DOI: 10.1080/13504851.2023.2259595

Access Statistics for this article

Applied Economics Letters is currently edited by Anita Phillips

More articles in Applied Economics Letters from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().