The Impact of Ownership and Financial Stability on Bank Liquidity Creation
Employing a descriptive approach, this study intends to investigate the causal relationship between financial stability and liquidity creation and the effects of foreign ownership, local ownership, and financial stability on liquidity creation. The research sample included 35 banks listed on the Ind...
Saved in:
| Main Authors: | , , , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
Sciendo
2025-03-01
|
| Series: | Studia Universitatis Vasile Goldis Arad, Seria Stiinte Economice |
| Subjects: | |
| Online Access: | https://doi.org/10.2478/sues-2025-0002 |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| _version_ | 1832593600958955520 |
|---|---|
| author | Sudarto Sudarto Adawiyah Wiwiek Rabiatul Najmudin Najmudin Jati Dian Purnomo |
| author_facet | Sudarto Sudarto Adawiyah Wiwiek Rabiatul Najmudin Najmudin Jati Dian Purnomo |
| author_sort | Sudarto Sudarto |
| collection | DOAJ |
| description | Employing a descriptive approach, this study intends to investigate the causal relationship between financial stability and liquidity creation and the effects of foreign ownership, local ownership, and financial stability on liquidity creation. The research sample included 35 banks listed on the Indonesia Stock Exchange based on a purposive sampling technique (non-random sampling) and the observation period between 2013 and 2020 utilizing quarterly data. According to the Granger causality test results, there is no reciprocal relationship between the creation of liquidity and financial stability. This indicates that the research variables avoid endogeneity problems. Using static panel data analysis, we discovered that neither foreign ownership nor financial stability has any impact on the creation of bank liquidity; however, the interaction between foreign ownership and financial stability has a significant positive impact, suggesting that the interaction between the two could become stronger. The asset-side liquidity creation component is the only one that plays this role. Domestic ownership favors liquidity creation, but there is less of an effect when ownership and financial stability are combined. When the creation of liquidity increases, production activities increase, suggesting that economic activity increases. Thus, these findings are useful for regulators and central banks in making economic and banking policies by considering bank ownership and stability. |
| format | Article |
| id | doaj-art-2679a6a7c9f74e58b624d49eaad33202 |
| institution | Kabale University |
| issn | 2285-3065 |
| language | English |
| publishDate | 2025-03-01 |
| publisher | Sciendo |
| record_format | Article |
| series | Studia Universitatis Vasile Goldis Arad, Seria Stiinte Economice |
| spelling | doaj-art-2679a6a7c9f74e58b624d49eaad332022025-01-20T11:10:13ZengSciendoStudia Universitatis Vasile Goldis Arad, Seria Stiinte Economice2285-30652025-03-01351304810.2478/sues-2025-0002The Impact of Ownership and Financial Stability on Bank Liquidity CreationSudarto Sudarto0Adawiyah Wiwiek Rabiatul1Najmudin Najmudin2Jati Dian Purnomo31“Economics and Business Faculty, Jenderal Soedirman University, Purwokerto, Indonesia2Economics and Business Faculty, Jenderal Soedirman University, Purwokerto, Indonesia3Economics and Business Faculty, Jenderal Soedirman University, Purwokerto, Indonesia4Economics and Business Faculty, Jenderal Soedirman University, Purwokerto, IndonesiaEmploying a descriptive approach, this study intends to investigate the causal relationship between financial stability and liquidity creation and the effects of foreign ownership, local ownership, and financial stability on liquidity creation. The research sample included 35 banks listed on the Indonesia Stock Exchange based on a purposive sampling technique (non-random sampling) and the observation period between 2013 and 2020 utilizing quarterly data. According to the Granger causality test results, there is no reciprocal relationship between the creation of liquidity and financial stability. This indicates that the research variables avoid endogeneity problems. Using static panel data analysis, we discovered that neither foreign ownership nor financial stability has any impact on the creation of bank liquidity; however, the interaction between foreign ownership and financial stability has a significant positive impact, suggesting that the interaction between the two could become stronger. The asset-side liquidity creation component is the only one that plays this role. Domestic ownership favors liquidity creation, but there is less of an effect when ownership and financial stability are combined. When the creation of liquidity increases, production activities increase, suggesting that economic activity increases. Thus, these findings are useful for regulators and central banks in making economic and banking policies by considering bank ownership and stability.https://doi.org/10.2478/sues-2025-0002financial stabilityliquidity creationownershipendogeneity problemsliquidity creation componentsg20g21 |
| spellingShingle | Sudarto Sudarto Adawiyah Wiwiek Rabiatul Najmudin Najmudin Jati Dian Purnomo The Impact of Ownership and Financial Stability on Bank Liquidity Creation Studia Universitatis Vasile Goldis Arad, Seria Stiinte Economice financial stability liquidity creation ownership endogeneity problems liquidity creation components g20 g21 |
| title | The Impact of Ownership and Financial Stability on Bank Liquidity Creation |
| title_full | The Impact of Ownership and Financial Stability on Bank Liquidity Creation |
| title_fullStr | The Impact of Ownership and Financial Stability on Bank Liquidity Creation |
| title_full_unstemmed | The Impact of Ownership and Financial Stability on Bank Liquidity Creation |
| title_short | The Impact of Ownership and Financial Stability on Bank Liquidity Creation |
| title_sort | impact of ownership and financial stability on bank liquidity creation |
| topic | financial stability liquidity creation ownership endogeneity problems liquidity creation components g20 g21 |
| url | https://doi.org/10.2478/sues-2025-0002 |
| work_keys_str_mv | AT sudartosudarto theimpactofownershipandfinancialstabilityonbankliquiditycreation AT adawiyahwiwiekrabiatul theimpactofownershipandfinancialstabilityonbankliquiditycreation AT najmudinnajmudin theimpactofownershipandfinancialstabilityonbankliquiditycreation AT jatidianpurnomo theimpactofownershipandfinancialstabilityonbankliquiditycreation AT sudartosudarto impactofownershipandfinancialstabilityonbankliquiditycreation AT adawiyahwiwiekrabiatul impactofownershipandfinancialstabilityonbankliquiditycreation AT najmudinnajmudin impactofownershipandfinancialstabilityonbankliquiditycreation AT jatidianpurnomo impactofownershipandfinancialstabilityonbankliquiditycreation |