Work detail

Liquidity creation and banks´ capital casual effect: GIIPS countries case

Author: Mgr. Gladiola Gjuzi
Year: 2018 - summer
Leaders: doc. Ing. Zdeněk Tůma CSc.
Consultants:
Work type: Finance, Financial Markets and Banking
Masters
Language: English
Pages: 68
Awards and prizes:
Link: https://is.cuni.cz/webapps/zzp/detail/188331/
Abstract: This study observes the impact of regulatory capital on liquidity creation of banks in GIIPS
countries over the period 2006-2016. The results are estimated by conducting a panel data analysis
and evaluating Fixed Effect model proceeded by a 2SLS regression method. The results show that
there exists a negative relationship between regulatory capital and liquidity creation. They give
support to policymakers of Basel III/CRD IV to be concerned about the consequences of imposing
higher capital requirements. Furthermore, size of the bank is correlated negatively with liquidity
creation, and financial crisis does impact the magnitude of the relationship between regulatory
capital and liquidity creation. Nevertheless, we suggest that new buffers on liquidity and capital
requirements should be accompanied by other prudential tools to ensure a stable financial system
in GIIPS countries.

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