Looking Inside Liquidity of Scheduled Commercial Public Sector Banks: An ARDL Approach
Keywords:
Banks, Liquidity, Public, CommercialAbstract
Banks area unit are providing less liquidity to lenders; however the demand for funds by the lenders has been increasing day by day which ends in serious losses in fastened financial gain. The impede in Repo rate decrease the bank’s disposition to supply liquidity in fastened financial gain markets as marginal profits reduces. Liquidity management was ready to expeditiously mitigate liquidity risk. Hence, thereought to judge the liquidity of scheduled business public sector banks. The adoption of the Descriptive Research Design was appropriate and effective in the present study. The study has been conducted for the period from 2006-07 to 2015-16 for all scheduled commercial public sector banks. The study specifically aims to evaluate the liquidity of scheduled commercial public sector banks. The choice of variables was based on previous relevant studies. Panel Autoregressive Distributed Lag model (ARDL) model is used. Error correction representation of the ARDL model showed the short-run elasticity. Results represented that in the short-run D(SLR(-3)) is the most significant factor (with the negative coefficient and largest t-ratio) to assess liquidity. It implied that there is negative (-0.045) and significant (0.000) relationship between Statutory Liquidity Ratio at lag 3 and Liquidity at 5% level of significance.
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