{"title":"What Explains Excess Liquidity of Banks? Empirical Evidence from India","authors":"Md Gyasuddin Ansari, Rudra Sensarma","doi":"10.1177/09726527221101134","DOIUrl":null,"url":null,"abstract":"We study excess liquidity in the banking system using data for India during 2005–2020. We apply Autoregressive Distributed Lag model and panel regressions to identify the factors determining excess liquidity at both aggregate and bank levels. We find that required reserves, private sector credit, and government securities held by banks have negative, positive, and negative effects on excess liquidity, respectively. Other factors such as exchange rate and inter-bank call rate have varying effects at the two levels. Our results suggest that banks can chalk out mechanisms to optimize their liquidity management and avoid the cost of excess liquidity. JEL Classifications: C23, E50, E58, G00, G21","PeriodicalId":44100,"journal":{"name":"Journal of Emerging Market Finance","volume":null,"pages":null},"PeriodicalIF":1.2000,"publicationDate":"2022-07-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"1","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Journal of Emerging Market Finance","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.1177/09726527221101134","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q3","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 1
Abstract
We study excess liquidity in the banking system using data for India during 2005–2020. We apply Autoregressive Distributed Lag model and panel regressions to identify the factors determining excess liquidity at both aggregate and bank levels. We find that required reserves, private sector credit, and government securities held by banks have negative, positive, and negative effects on excess liquidity, respectively. Other factors such as exchange rate and inter-bank call rate have varying effects at the two levels. Our results suggest that banks can chalk out mechanisms to optimize their liquidity management and avoid the cost of excess liquidity. JEL Classifications: C23, E50, E58, G00, G21
期刊介绍：
The Journal of Emerging Market Finance is a forum for debate and discussion on the theory and practice of finance in emerging markets. While the emphasis is on articles that are of practical significance, the journal also covers theoretical and conceptual aspects relating to emerging financial markets. Peer-reviewed, the journal is equally useful to practitioners and to banking and investment companies as to scholars.
京公网安备 11010802042870号
京ICP备2023020795号-1
分享
求助内容：
应助结果提醒方式：
扫码关注我们
