Vol 9, No 4 (2021)

The Effect of Liquidity Risk Management on Financial Performance of Commercial Banks in Pakistan

Wajid Alim, Amjad Ali, Mahwish Rauf Metla


The study tests the effect of liquidity risk management on financial performance of commercial banks in Pakistan. Pakistani financial market is heavily dependent on its banking sector to achieve its financial goals and stability. Therefore, banking sector’s performance has a significant effect on the overall economy of the country. To achieve its need for stability, the central bank of Pakistan ensures that banks maintain an optimum liquidity position to reap most benefits and increased returns. In this study, effect of liquidity risk management on financial performance is studied using panel data for Ordinary Least Square analysis. Financial data of all commercial banks operating in Pakistan during the period of study was taken from year 2006 to 2019 using data archives of State Bank of Pakistan website. It is concluded that higher liquidity increases banks’ performance in commercial banks of Pakistan. The results are in line with a number of studies and available literature. This study can become a good reference for future policy decisions regarding minimum liquidity requirements of banks in this region. This study can be further enhanced using a longer period of study and include more variables specific to banking sector in Pakistan, like bank size, age of bank etc. Further studies may include other non-commercial banks to further strengthen the study and increase its reliability.

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Liquidity Risk, Performance, Banking Sector, ROA, ROE, Pakistan.

Publication information

Volume 9, Issue 4
Year of Publication: 2021
ISSN: 1857 - 8721
Publisher: EDNOTERA

How to cite

Alim W., Ali A., Metla M. R.: Does Financial Inclusion Alleviate Poverty in Nigeria? A Time Series Analysis. Journal of Applied Economics and Business, Vol 9, No. 4, 109-128. (2021)