تحقیقات مالی (Dec 2018)

Investigating the Impact of Non-Banking Financial and Banking Commerce Activities Regulations on Their Liquidity in Developing Countries

  • Tahmasb Mazaheri,
  • Saeid Shirkavnd,
  • Ali Jamali

DOI
https://doi.org/10.22059/frj.2018.262674.1006704
Journal volume & issue
Vol. 20, no. 4
pp. 445 – 466

Abstract

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Objective: The purpose of this study is to investigate the effect of the structure of regulations regarding non-banking activities on liquidity of the banking industry in 107 developing countries from 2000 to 2012. Methods: The dependent variable in this study is the ratio of cash assets and short-term investments on current deposits and short-term bank debts. While the independent variables include the limitation on non-banking financial activities and banks' commercial activities such as insurance, stock and real state and also investment in non-banking firms.. The effects of macroeconomic and industry-specific variables are also studied. Due to the changeable nature of the variables, dynamic analysis of panel data and the GMM method are used for data analysis. Results: The results showed that there is asignificantly positive relationship between commerce-finance-banking restrictions and banking liquidity. However, there is no significant relationship between regulation of capital market, insurance market and real state market and banking liquidity respectively. Conclusion: The results of the present research showed that the more strict regulation of the non-bank financial activities, the more significantly positive effect on the liquidity situation of the banks. Besides, more stringent regulatory structure regarding banks commerce activities has a positive and significant relationship with liquidity.

Keywords