Business Commons^™

Factors Affecting The Liquidity Of Commercial Banks In India: A Longitudinal Analysis, Shyam S. Bhati, Anura De Zoysa, Wisuttorn Jitaree

Faculty of Business - Papers (Archive)

This paper examines the long-term effect of various regulatory, bank-specific and macroeconomic factors on the determination of liquidity in Indian banks. For this purpose, the study uses a random effect panel data regression model and tests it with data on Indian banks for 21 years, covering the period from 1996 to 2016. The model considers the effect of regulatory factors, cash reserve ratio, and statutory liquidity, and incorporates four different liquidity ratios specific to the Indian banking scenario. The results of the analysis show contrasting relationships between the independent variables and the dependent variables measured by four liquidity ratios. It …