Interest rate liberalization and the procyclicality of the bank liquidity buffer: Evidence from China

IF 2.9 3区经济学 Q1 ECONOMICS

Journal of Asian Economics Pub Date : 2025-02-20 DOI:10.1016/j.asieco.2025.101904

Hai Jiang , Yunfan Zhu , Chao Yuan , Xiaolin Zhang

引用次数: 0

Abstract

This paper investigates the impact of interest rate liberalization (IRL) on the procyclicality of the bank liquidity buffer based on data of 377 commercial banks in China from 2007 to 2019. The results show that the liquidity buffer is procyclical. The advancement of IRL diminishes the bank liquidity buffer and exacerbates its procyclicality. The expansion of the fluctuation level of interest rate, one dimension of IRL, is the dominant driving factor. Furthermore, this paper finds that the effect of IRL on the procyclicality of the liquidity buffer is amplified in non-primary, joint-stock, city and less-profitable banks. Additionally, the IRL has a higher negative impact on the liquidity buffer of banks that engage in greater risk-taking.

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来源期刊

Journal of Asian Economics ECONOMICS-

CiteScore

4.70

自引率

9.40%

发文量

期刊介绍： The Journal of Asian Economics provides a forum for publication of increasingly growing research in Asian economic studies and a unique forum for continental Asian economic studies with focus on (i) special studies in adaptive innovation paradigms in Asian economic regimes, (ii) studies relative to unique dimensions of Asian economic development paradigm, as they are investigated by researchers, (iii) comparative studies of development paradigms in other developing continents, Latin America and Africa, (iv) the emerging new pattern of comparative advantages between Asian countries and the United States and North America.