- مبلغ: ۸۶,۰۰۰ تومان
- مبلغ: ۹۱,۰۰۰ تومان
The global financial crisis has induced a series of failures of most conventional banks. This study investigates the main sources of banking fragility. We use a sample of 49 banks operating in the MENA region over the period 2006e2013 to analyze the relationship between credit risk and liquidity risk and its impact on bank stability. Our results show that credit risk and liquidity risk do not have an economically meaningful reciprocal contemporaneous or time-lagged relationship. However, both risks separately influence bank stability and their interaction contributes to bank instability. These findings provide bank managers with more understanding of bank risk and serve as an underpinning for recent regulatory efforts aimed at strengthening the joint risk management of liquidity and credit risks.
The recent financial crisis has led to bank failures that have had a negative impact on the real economy. Therefore, a particular attention to the consequences of financial instability on the economy has been established (Agnello & Sousa, 2012). Furthermore, in an environment characterized by market imperfections, it is imperative to protect the depositors against bank failures (Dewatripont & Tirole, 1994). Consequently, the banking system needs to identify the sources of banking fragility. On the other hand, banks are exposed to several financial risks. According to Cecchetti and Schoenholtz (2011), these financial risks include the chance that depositors will suddenly withdraw their deposits (liquidity risk), borrowers will not repay their loans on time (credit risk), interest rates will change (interest rate risk), the bank's computer systems will fail or their buildings will burn down (operational risk). Nevertheless, among these risks, credit and liquidity risks are not only the most important risks that banks face, but they are also directly linked to what banks do and why banks fail.
5. Conclusion and policy implications
Liquidity and credit risks are the two most important factors for banking survival. This paper studies the effect of liquidity risk and credit risk on banking stability using a panel dataset of 49 banks operating in the MENA countries over the period 2006e2013. Moreover, we found that credit risk and liquidity risk do not have an economically meaningful reciprocal contemporaneous or time-lagged relationship, besides, each risk category has a significant impact on banking stability. We also documented that the interaction of the two risk categories has a significant impact on banking stability. Therefore, the estimation results showed the importance of credit and liquidity risks in understanding banking stability in the MENA region.