Liquidity Creation and Bank Performance of Syrian Banks before and during the Syrian War

• Main Authors: Ahmad Sahyouni, Man Wang
• Format: Article
• Language: English
• Published: MDPI AG 2019-07-01
• Series: International Journal of Financial Studies
• Subjects: liquidity creation; bank performance; Syria; war; instrumental variable
• Online Access: https://www.mdpi.com/2227-7072/7/3/40

This paper estimates the amount of liquidity created by Syrian banks between 2004 and 2016, and further investigates the effect of liquidity creation on bank performance, controlling for a set of bank-level, industry-level, and macroeconomic variables. The findings show bank liquidity creation improved during the pre-war period and showed positive figures, but started to decline sharply during wartime. The results also show a negative relationship between liquidity creation and bank profitability (return on assets) during wartime; however, this relationship was insignificant before the war. Finally, this study conducted robustness checks to confirm its findings.