Title: Assessing the factors affecting the liquidity risk in Jordanian commercial banks: a panel data analysis

Authors: Nusiebeh Nahar Falah Alrwashdeh; Rizwan Ahmed; Muhammad Hassan Danish; Qasim Shah

Addresses: Cardiff School of Management, Cardiff Metropolitan University, Llandaff Campus, Western Avenue, Cardiff CF5-2YB, UK ' Birmingham City Business School, University of Birmingham, The Curzon Building, 4 Cardigan Street, Birmingham B4-7BD, UK ' School of Commerce and Accountancy, University of Management and Technology, 157-M, Madre Millat Road Near Hamdard Chowk, Township, Lahore, Pakistan ' Department of Mathematics and Statistics, International Islamic University, IIUI Schools, #18, Main Road, Sector I/8-3, Islamabad, Pakistan

Abstract: One of the main purposes of banks' risk management is to control credit and liquidity risk which are the main sources of risk. This research explores factors affecting liquidity risk of commercial banks operating in Jordan, spanning from 2003 through 2017. The sample of the study includes all commercial banks by employing pooled OLS and panel 2SLS econometric techniques. Findings of the study show that bank size, return on assets (ROA), capital adequacy ratio (CAR), risk, non-performing loans (NPL), T-equality and T-liability have a positive impact on liquidity risk. While return on equity (ROE) shows the negative and significant impact on the liquidity risk. This study suggests that authorities should trace and monitor the determined internal factors that have a negative impact on the liquidity of banks to minimise bank run chances.

Keywords: liquidity risk; commercial bank; Jordan; return on assets; ROA; capital adequacy ratio; CAR; panel data.

DOI: 10.1504/IJBCRM.2023.130304

International Journal of Business Continuity and Risk Management, 2023 Vol.13 No.1, pp.84 - 99

Received: 25 Sep 2021
Received in revised form: 05 Apr 2022
Accepted: 10 Jun 2022
Published online: 17 Apr 2023 *