Management of Liquidity Risk and the Banking Activity

The Banking System of Kosovo as a Case

  • Leonora Haliti Rudhani PhD Candidate
  • Driton Balaj
Keywords: liquidity risk; banking systems; liquidity

Abstract

The banking sector in Kosovo continues to have a high level of sustainability and financial stability. Two substantial components for the stability of the banking system appear to be liquidity and liquidity risk. The purpose of this paper is to analyze liquidity management in Kosovo's commercial banks through liquidity risk indicators from 2008 to 2017. By comparing the methodology of the data presented, the study will assess the state of management of the liquidity risk of commercial banks. From 2008 until now, commercial banks in Kosovo have had liquidity reserves at a level higher than the level required by CBK, which means that exposure to liquidity risk was minimal.

References

Ahmed,H., & Khan,T. (2007). Risk management in Islamic banking. In L. Hassan.K, Handbook of Islamic

Banking (p. 160). Cheltenham, UK: Edward Elgar Publishing Limited.

Allen,F., & Santomero,M.A. (1997). The theory of financial intermediation. Journal of Banking & Finance, Vol.21, 1461-1485. https://doi.org/10.1016/S0378-4266(97)00032-0

Banks, E. (2005). Liquidity Risk, Managing Asset and Funding Risk. New York, United States: Palgrave Macmillan.

BCBS. (2008). Principles for Sound Liquidity Risk Management and Supervision. Basel: Bank for International Settlements. https://www.bis.org/publ/bcbs144.htm

Bessis, J. (2015). Risk management in banking (Fourth edition ed.). United Kingdom: John Wiley & Sons, Ltd.

BQK. (2011). Raporti i Stabilitetit Financiar. Prishtine: BQK, www.bqk-kos.org;

BQK. (2013). Raporti i Stabilitetit Financiar Nr.4. Prishtine: BQK. www.bqk-kos.org;

Chen,K., Shen,H.Ch., Kao,L., Yeh,Y.Ch. (2018). Bank Liquidity Risk and Performance. Review of Pacific Basin Financial Markets and Policies (RPBFMP), vol.21(No.01), 1-40. http://www.worldscientific.com/doi/abs/10.1142/S0219091518500078

Falconer, B. (2001). Structural liquidity: the worry beneath the surface. Balance Sheet, Vol. 9(No.3), 13-19,. DOI: https://doi.org/10.1108/09657960110695998

Greuning,H., & Bratanovic,B.S. (2009). Analyzing Banking Risk, A Framework for Assessing, Corporate Governance and Risk Management. (T. edition, Ed.) Washington, D.C., United States of America: Th e International Bank for Reconstruction and Development/THE WORLD BANK.

Johannes, P. S., Sheefeni, J., Nyambe,J. (2016). Macroeconomic Determinants Of Commercial Banks’ Liquidity In Namibia. European Journal of Business, Economics and Accountancy, Vol.4(No.5), 19-30. https://www.idpublications.org/wp-content/uploads/2016/05/Full-Paper-MACROECONOMIC-DETERMINANTS-OF-COMMERCIAL-BANKS%E2%80%99-LIQUIDITY-IN-NAMIBIA.pdf

Korean Institute of Finance. (2010). Regulation and Supervision for Sound Liquidity Risk Management for Banks. Thailand: Fiscal Policy Research Institute https://www.asean.org/uploads/2012/10/17b.pdf.

Kumar, M., & Yadav, Ch.G. (2013). Liquidity Risk Management In Bank: A Conceptual Framework. AIMA Journal of Management & Research, Vol.7(No. 2/4,). https://apps.aima.in/ejournal_new/articlesPDF/Manish-Kumar.pdf

Mueller, H. (1998). Bank Liquidity, Short Memories & Inescapable Basics. Journal of Lending & Credit Risk Management, Vol.81(No.1), 61-69. https://www.questia.com/magazine/1G1-21135996/bank-liquidity-short-memories-inescapable-basics;

Munteanua, I. (2012). Bank liquidity and its determinants in Romania. Emerging Market Queries in Finance and Business Procedia Economics and Finance, Vol.3, 993 – 998. https://doi.org/10.1016/S2212-5671(12)00263-8;

Myers,C.S., & Rajan,R. (1998). The Paradox of Liquidity. The Quarterly Journal of Economics, Vol.113(No.3), 733-771. https://www.jstor.org/stable/2586872;

Rudhani,H.R., Ahmeti,S., Rudhani,R. (2016). The Impact of Internal Factors on Bank Profitability in Kosovo. Acta Universitatis Danubius Oeconomica, Vol. 12 ( no. 1), pp. 95-107. http://journals.univ-danubius.ro/index.php/oeconomica/article/view/3090/3210

Tileaga,C., Nitu,O., Nitu,V.C. (2013). Banking Risk Management - RCB Strategy. International Economic Conference of Sibiu 2013 Post Crisis Economy: Challenges and (pp. 719 – 723). Sibiu: Procedia Economics and Finance 6. DOI: 10.1016/S2212-5671(13)00194-9;

Vento, A.G., & Ganga, L.P. (2009). Bank Liquidity Risk Management and Supervision: Which Lessons from Recent Market Turmoil? Journal of Money, Investment and Banking, 79-126. http://s3.amazonaws.com/zanran_storage/www.eurojournals.com/ContentPages/1025685850.pdf;

Vodová, P. (2011). Liquidity of Czech Commercial Banks and its Determinants. INTERNATIONAL JOURNAL OF MATHEMATICAL MODELS AND METHODS IN APPLIED SCIENCES, vol.5(no.6), pp:1060-1067. http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.418.2468&rep=rep1&type=pdf;

VODOVÁ, P. (2013). Liquidity Ratios of Polish Commercial Banks. European Financial and Accounting Journal, vol. 8(no. 3-4), pp. 24-38. doi:10.18267/j.efaj.105

Published
2019-07-20
How to Cite
Rudhani, L., & Balaj, D. (2019). Management of Liquidity Risk and the Banking Activity. International Journal of Finance & Banking Studies (2147-4486), 8(2), 01-08. https://doi.org/10.20525/ijfbs.v8i2.299
Section
Articles