{"title":"Financial instability in Lebanon: Do the liquidity creation and performance of banks matter?","authors":"George Maroun, Vincent Fromentin","doi":"10.1016/j.qref.2024.05.001","DOIUrl":null,"url":null,"abstract":"<div><p>Our paper explores the existence and nature of an established relationship between the banks’ function as liquidity creators, their profitability, and the instability of the financial system in Lebanon. Using original, annual observations of Lebanese bank data for the period 1997 – 2019 and employing fixed effect OLS regressions and system GMM to account for the dynamic aspect of our data, we show that liquidity creation is significantly associated with lower financial stability and thus higher instability. Banks’ profitability is positively linked to their systemic stability. The results vary slightly from one estimate to another, but they stand up to robustness tests. Our empirical results have a substantial impact on banks’ control and regulatory approaches in Lebanon and similar developing countries, while contributing to a deeper understanding of systematic and broader financial instabilities in these countries.</p></div>","PeriodicalId":47962,"journal":{"name":"Quarterly Review of Economics and Finance","volume":null,"pages":null},"PeriodicalIF":2.9000,"publicationDate":"2024-05-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Quarterly Review of Economics and Finance","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S1062976924000644","RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 0
Abstract
Our paper explores the existence and nature of an established relationship between the banks’ function as liquidity creators, their profitability, and the instability of the financial system in Lebanon. Using original, annual observations of Lebanese bank data for the period 1997 – 2019 and employing fixed effect OLS regressions and system GMM to account for the dynamic aspect of our data, we show that liquidity creation is significantly associated with lower financial stability and thus higher instability. Banks’ profitability is positively linked to their systemic stability. The results vary slightly from one estimate to another, but they stand up to robustness tests. Our empirical results have a substantial impact on banks’ control and regulatory approaches in Lebanon and similar developing countries, while contributing to a deeper understanding of systematic and broader financial instabilities in these countries.
期刊介绍：
The Quarterly Review of Economics and Finance (QREF) attracts and publishes high quality manuscripts that cover topics in the areas of economics, financial economics and finance. The subject matter may be theoretical, empirical or policy related. Emphasis is placed on quality, originality, clear arguments, persuasive evidence, intelligent analysis and clear writing. At least one Special Issue is published per year. These issues have guest editors, are devoted to a single theme and the papers have well known authors. In addition we pride ourselves in being able to provide three to four article "Focus" sections in most of our issues.
求助内容：
应助结果提醒方式：
京公网安备 11010802042870号
