Factors affecting liquidity of banks in Malaysia / Harisa Nabila Rohisham

The factors affecting bank liquidity in Malaysia are investigated in this paper. It is common knowledge that the primary purpose of banks is to generate a profit. At the same time, the banking sector performs a number of critical functions, including lending to individuals and businesses, encouraging the accumulation of funds in the national economy, facilitating payments, transfers, and financial transactions, and ensuring the efficient allocation of investment resources. A cross-sectional survey research design was used in this study. Annual reports from 15 commercial banks and 15 Islamic banks in Malaysia were used to compile the data. All of the independent factors, such as bank size, capital adequacy ratio, cost of funding, and return on assets, were found to have a significant relationship with the dependent variable, liquidity. Policymakers would benefit from this research if it employed the internal factors in banks offered in this study to analyse the liquidity performance of banks in relation to the microeconomic variables included in this study.
Keywords: liquidity, bank, bank size, capital adequacy ratio, cost of.fund, return on assets