The Journal of Asian Finance, Economics and Business

Korea Distribution Science Association (한국유통과학회)
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Factors Influencing Liquidity Creation among Commercial Banks in Uzbekistan: An Empirical Study

  • OMONOV, Akrom A. (Department of Banking, Tashkent Institute of Finance) ;
  • MUHAMMAD, Kamaruzzaman (Faculty of Accountancy, Universiti Teknologi MARA, Cawangan Selangor) ;
  • GHANI, Erlane K. (Faculty of Accountancy, Universiti Teknologi MARA, Cawangan Selangor)
  • Received : 2022.10.10
  • Accepted : 2023.01.15
  • Published : 2023.01.30
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Abstract

The banking industry regulators have imposed on commercial banks to maintain a certain level of liquidity to ensure that they can meet their obligations to the depositors and third parties. This study examines the factors influencing liquidity creation among commercial banks in Uzbekistan. Specifically, this study examines three internal factors namely, risk assets, deposits, and inter-bank loans on the creation of liquidity in commercial banks of Uzbekistan. This study uses content analysis on financial reports of 33 commercial banks in Uzbekistan over 21 years. This study shows all the factors chosen in this study significantly influence liquidity creation among the commercial banks in Uzbekistan. While deposits and inter-bank loans significantly and positively influence liquidity creation, this study shows that risk assets significantly and negatively influence liquidity creation. Further analysis shows that these three factors contribute to a 92.4% variance in liquidity creation among commercial banks in Uzbekistan. The findings of this study provide valuable insights to the stakeholders in the banking industry on the factors influencing liquidity creation in banks. In addition, this study adds to the existing literature by providing insight into the internal factors' role in influencing liquidity creation in the context of an emerging economy.

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