Determinants of Bank Liquidity and their Impact on Bank Investment  

Econometric Analytical Study for a Sample of Iraqi Commercial Banks during the period (2006-2020)

A Thesis Submitted to

The Council of College of Administration and Economics- University of Kerbala

 in partial Fulfillment for the Requirements of the Degree of Master in Banking and Financial Sciences

A Thesis Submitted by

Zain Al Abideen Abbas Hassan

Under The Supervision:

Asst.Prof.Dr. Hamid Mohsin Jadah

The vital function of commercial banks in the national economy is manifested through the exercise of the role of financial intermediation based on transferring funds from surplus units to deficit units. from this point of view, any defect in the sources of funding will reflect on the availability of funds in the bank as well as the economy, given that making decisions aimed at seizing the available investment opportunities depends on the amount of liquidity available at the bank.

This study aims at diagnosing the two factors (internal and external) that affect banking liquidity, and then showing the impact of those affecting banking investment. In order to achieve the goal, a sample of (11) commercial banks listed in the Iraqi Stock Exchange for the period (2006-2020) was selected. to prove the hypotheses of the study, the determinants of liquidity (as independent variables) were measured by the following financial ratios: capital adequacy ratio, non-performing loans ratio, loan growth rate, rate of return on assets, bank size, short-term interest rate, inflation rate, (GDPG (rate. Whereas, bank liquidity and investment (as dependent variables) were measured by the monetary fund ratio and investment banking ratio, respectively. The study used a set of tests and analyzes using financial and statistical programs (Eviews, Microsoft Excel) to prove the hypotheses and to achieve the goal of the study.

The study resulted in a number of conclusions, and perhaps the most prominent of them is that the study sample banks have reservations about unutilized surplus financial balances, which indicates poor planning in the exploitation of resources and orientation towards investments. the study concluded with a number of recommendations, perhaps the most important of which is determining the optimal ratio of liquidity based on specialized scientific studies in a way that leads to an optimal exploitation of financial resources in the available investment Opportunities and avoiding leaving them idle. also, the need to develop an effective information system that contributes to monitoring and studying the internal and external factors of the bank that have proven their impact on bankers’ liquidity and investment, and following them up on a regular basis.

Determinants of Bank Liquidity and their Impact on Bank Investment  

Econometric Analytical Study for a Sample of Iraqi Commercial Banks during the period (2006-2020)

A Thesis Submitted to

The Council of College of Administration and Economics- University of Kerbala

 in partial Fulfillment for the Requirements of the Degree of Master in Banking and Financial Sciences

A Thesis Submitted by

Zain Al Abideen Abbas Hassan

Under The Supervision:

Asst.Prof.Dr. Hamid Mohsin Jadah

The vital function of commercial banks in the national economy is manifested through the exercise of the role of financial intermediation based on transferring funds from surplus units to deficit units. from this point of view, any defect in the sources of funding will reflect on the availability of funds in the bank as well as the economy, given that making decisions aimed at seizing the available investment opportunities depends on the amount of liquidity available at the bank.

This study aims at diagnosing the two factors (internal and external) that affect banking liquidity, and then showing the impact of those affecting banking investment. In order to achieve the goal, a sample of (11) commercial banks listed in the Iraqi Stock Exchange for the period (2006-2020) was selected. to prove the hypotheses of the study, the determinants of liquidity (as independent variables) were measured by the following financial ratios: capital adequacy ratio, non-performing loans ratio, loan growth rate, rate of return on assets, bank size, short-term interest rate, inflation rate, (GDPG (rate. Whereas, bank liquidity and investment (as dependent variables) were measured by the monetary fund ratio and investment banking ratio, respectively. The study used a set of tests and analyzes using financial and statistical programs (Eviews, Microsoft Excel) to prove the hypotheses and to achieve the goal of the study.

The study resulted in a number of conclusions, and perhaps the most prominent of them is that the study sample banks have reservations about unutilized surplus financial balances, which indicates poor planning in the exploitation of resources and orientation towards investments. the study concluded with a number of recommendations, perhaps the most important of which is determining the optimal ratio of liquidity based on specialized scientific studies in a way that leads to an optimal exploitation of financial resources in the available investment Opportunities and avoiding leaving them idle. also, the need to develop an effective information system that contributes to monitoring and studying the internal and external factors of the bank that have proven their impact on bankers’ liquidity and investment, and following them up on a regular basis.