THE DETERMINATE OF LIQUIDITY RISK ON COMMERCIAL BANK IN PAKISTAN

Abstract

Purpose The research purpose is to examine the impact of commercial bank-specific indicators (Deposits, Profitability, Bank Size and Capital Adequacy Ratio) upon liquidity Risk in Pakistan. Methodology & Design The research Design is based on quantitative and longitudinal research in which Secondary data is used to determine the cause and effect of the Capital Adequacy Ratio, Profitability, Deposits and Bank Size upon the liquidity risk and considered panel least square methodology to examine top 5 banks (MCB, HBL, UBL, ABL and Bank Alfalah) data ranging from 2010- 2019 in which only privately owned commercial banks were taken which had the bank size of same in nature with respect to the categoiy ofthe privately owned scheduled commercial banks operating in Pakistan. Findings The findings explained that deposits do not have any significant impact upon Bank liquidity risk whereas rest of variables Capital Adequacy, Profitability and Bank Size were found significant. Furthermore negative correlation was found between profitability and bank liquidity risk however, positive correlation was found between Capital Adequacy (Tier l ratio), Size of the bank with the liquidity risk of the bank