LIQUIDITY RISK EXPOSURE AND ITS DETERMINANTS IN THE BANKING INDUSTRY OF PAKISTAN: AN ANALYSIS OF ISLAMIC AND CONVENTIONAL BANKS OF PAKISTAN

Abstract

Purpose The purpose of this study was to find the determinants of liquidity risk exposure in banking sector of Pakistan. Methodology & Design A panel data from 13 banks of Pakistan was collected for a time period of 2005-2020. Research design includes positivist approach. Data was collected through bank’s annual reports and later on multiple linear regression has been used to analyze the data. Findings Findings of the study suggest that loan loss provision, deposit and asset quality have significant impact on liquidity risk exposure ofthe conventional banks in Pakistan. Limitations Major limitation of the study is that it has not taken into account the Islamic banks of Pakistan. Furthermore, this study has considered only the liquidity risk ofthe banks. Recommendations Other dimensions ofrisk must be undertaken for future studies