Impact of Bank-Specific and Macroeconomic Determinants on Liquidity Risk: Empirical Evidence from Banking Sector of Bangladesh
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Item Impact of Bank-Specific and Macroeconomic Determinants on Liquidity Risk: Empirical Evidence from Banking Sector of Bangladesh(Comilla University, 26-May-2025) Monima Saha Tia, Monima Saha TiaThe purpose of this study is to investigate into how bank-specific and macroeconomic factors affect Bangladeshi banks' liquidity risk. The relationship between macroeconomic and bankspecific factors and liquidity is demonstrated in this study using the Random Effect Model and the Pooled OLS Model. The Hausman test has been utilized in this study to determine which of the Random Effect Model and Fixed Effect Model is the best. It is evident from the Hausman test results that the random effect model outperforms the fixed effect model. In this context, ten banks' annual reports over the last ten years (2014–2023) have been used. The study shows that bank size and total loan to total asset have a statistically significant relationship with liquidity risk. This is supported by both models (Pooled OLS Model and Random Effect Model). Here, loan to deposit ratio is the measure of liquidity risk. GDP growth and inflation have a statistically significant positive relation with liquidity risk(Loan to Deposit Ratio). This decision is also supported by both models. Return on assets ,capital adequacy ratio and operating expenses to total assets ratio have