Nexus of liquidity creation, profitability and bank stability with the moderating role of corruption: an empirical analysis

Q1 Social Sciences

Journal of Financial Crime Pub Date : 2023-12-11 DOI:10.1108/jfc-08-2023-0198

Misbah Javid, Khurram Ejaz Chandia, Qamar Uz Zaman Malik

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Abstract

Purpose This study aims to investigate the impact of liquidity creation (LC) on the profitability and stability of banks while considering the moderating role of corruption. Design/methodology/approach Panel data from 23 conventional banks and five Islamic banks in Pakistan spanning from 2008 to 2021 were used for analysis. The study used fixed effect and random effect models, along with the generalized method of moments estimation to ensure robustness of the results. Findings The study reveals a negative relationship between LC and banking profitability, but a positive association with banking stability. Additionally, corruption is found to play a moderating role in the relationship between LC, profitability and stability in the banking sector of Pakistan. Research limitations/implications The findings have practical implications for bank managers and investors, emphasizing the negative relationship between LC and profitability in Pakistan. Moreover, the study highlights the significant impact of corruption on bank performance, which can guide policymakers in formulating strategies to strengthen the banking sector and prevent financial turmoil in the future. Originality/value This study makes a significant contribution to the existing literature by examining the moderating role of corruption in the relationship between LC, profitability and stability in both conventional and Islamic banks.

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流动性创造、盈利能力和银行稳定性之间的联系与腐败的调节作用：实证分析

本研究旨在探讨流动性创造(LC)对银行盈利能力和稳定性的影响，同时考虑腐败的调节作用。设计/方法/方法使用2008年至2021年期间来自巴基斯坦23家传统银行和5家伊斯兰银行的面板数据进行分析。本研究采用固定效应和随机效应模型，并采用广义矩估计方法来保证结果的鲁棒性。研究发现:信用证与银行盈利能力呈负相关，但与银行稳定性呈正相关。此外，腐败被发现在巴基斯坦银行业的LC，盈利能力和稳定性之间的关系中发挥调节作用。研究局限性/启示研究结果对银行经理和投资者具有实际意义，强调了巴基斯坦LC与盈利能力之间的负相关关系。此外，该研究还强调了腐败对银行绩效的重大影响，这可以指导决策者制定加强银行业和防止未来金融动荡的战略。原创性/价值本研究通过考察腐败在传统银行和伊斯兰银行的LC、盈利能力和稳定性之间的关系中的调节作用，对现有文献做出了重大贡献。

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来源期刊

Journal of Financial Crime Social Sciences-Law

CiteScore

3.10

自引率

0.00%

发文量

期刊介绍： The Journal of Financial Crime, the leading journal in this field, publishes authoritative, practical and detailed insight in the most serious and topical issues relating to the control and prevention of financial crime and related abuse. The journal''s articles are authored by some of the leading international scholars and practitioners in the fields of law, criminology, economics, criminal justice and compliance. Consequently, articles are perceptive, evidence based and have policy impact. The journal covers a wide range of current topics including, but not limited to: • Tracing through the civil law of the proceeds of fraud • Cyber-crime: prevention and detection • Intelligence led investigations • Whistleblowing and the payment of rewards for information • Identity fraud • Insider dealing prosecutions • Specialised anti-corruption investigations • Underground banking systems • Asset tracing and forfeiture • Securities regulation and enforcement • Tax regimes and tax avoidance • Deferred prosecution agreements • Personal liability of compliance managers and professional advisers