Open AccessTHE IMPACT OF NET STABLE FUNDING RATIO ON BANK PERFORMANCE AND RISK AROUND THE WORLD
Author(s) -
Bowo Setiyono,
Ahmad Maulin Naufa
Publication year - 2021
Publication title -
deleted journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.505
H-Index - 4
ISSN - 2460-9196
DOI - 10.21098/bemp.v23i4.1166
Subject(s) - market liquidity , robustness (evolution) , business , panel data , financial system , economics , econometrics , finance , biochemistry , chemistry , gene
This study examines whether liquidity, as measured by net stable funding ratio (NSFR), impacts bank performance and risk. Based on an annual panel data set consisting of 2,909 banks from 127 countries, we find that NSFR reduces both performance and risk. These results are uniquely different in the robustness analysis under various settings (non-linear relationships, high versus low NSFR, and conventional versus Islamicbanks). Overall, NSFR implementation brings benefits in the form of risk reduction rather than performance improvement to banks around the world.