Article: Bank capital and liquidity creation: evidence from Sub-Saharan Africa Journal: Global Business and Economics Review (GBER) 2023 Vol.28 No.4 pp.367 - 387 Abstract: Liquidity creation is among the major function played by banks in advancing economic development within a country. This study seeks to examine the effect of bank capital on liquidity creation among Sub-Saharan African banks. Fifty listed banks are drawn across six SSA countries consisting of Nigeria, Ghana, South Africa, Zambia, Kenya, and Tanzania, based on their financial market strength within the region. The system-generalised method of moment (GMM) is the analysis technique used for inference in the study due to its ability to address endogeneity bias and provide consistent findings. The findings from the study revealed a significant positive correlation between bank capital and liquidity creation. The study suggests that banks should always comply with regulatory capital guidelines provided by regulatory authorities to maintain their critical role of liquidity creation in the economy. Inderscience Publishers - linking academia, business and industry through research

Title: Bank capital and liquidity creation: evidence from Sub-Saharan Africa

Authors: Adamu Yahaya; Fauziah Mahat; Mohammad Tukur Saidu; Umar Tijjani Babuga

Addresses: School of Business and Economics, Universiti Putra Malaysia, 43400, Serdang, Selangor, Malaysia; Department of Business Management, Federal University Dutsin-Ma, P.M.B. 5001, Dustin-Ma, Nigeria ' School of Business and Economics, Universiti Putra Malaysia, 43400, Serdang, Selangor, Malaysia ' School of Business and Economics, Universiti Putra Malaysia, 43400, Serdang, Selangor, Malaysia; Federal College of Education, Zaria, Kaduna State, Nigeria ' School of Business and Economics, Universiti Putra Malaysia, 43400, Serdang, Selangor, Malaysia; Yusuf Maitama Sule University, Kano State, Nigeria

Abstract: Liquidity creation is among the major function played by banks in advancing economic development within a country. This study seeks to examine the effect of bank capital on liquidity creation among Sub-Saharan African banks. Fifty listed banks are drawn across six SSA countries consisting of Nigeria, Ghana, South Africa, Zambia, Kenya, and Tanzania, based on their financial market strength within the region. The system-generalised method of moment (GMM) is the analysis technique used for inference in the study due to its ability to address endogeneity bias and provide consistent findings. The findings from the study revealed a significant positive correlation between bank capital and liquidity creation. The study suggests that banks should always comply with regulatory capital guidelines provided by regulatory authorities to maintain their critical role of liquidity creation in the economy.

Keywords: tier 1 capital; cat_fat; cat_nonfat; deposit ratio; loan ratio; system GMM.

DOI: 10.1504/GBER.2023.131183

Global Business and Economics Review, 2023 Vol.28 No.4, pp.367 - 387

Received: 10 Oct 2020
Accepted: 22 Feb 2022
Published online: 01 Jun 2023 *

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Title: Bank capital and liquidity creation: evidence from Sub-Saharan Africa

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