The Impact of Prudential Regulation on Jordanian Banks Liquidity
International Journal of Business and Economics Research
Volume 9, Issue 5, October 2020, Pages: 352-357
Received: Sep. 5, 2020; Accepted: Sep. 19, 2020; Published: Oct. 12, 2020
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Jamileh Ali Mustafa, Economic Department, Faculty of Business, The University of Jordan, Amman, Jordan
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Regulation of the financial sector is major aspect of consideration by the regulating authority, since financial sector highly influences the performance of the entire economy. The Global Financial Crises underlined the importance of liquidity management,when the credit crisis led to a liquidity crisis. Thus, Jordanian regulatory authorities are trying to achieve and maintain the financial stability by assessment of the banks’ financial condition and through regulations that ensure the stability and prevent failures that can occur under adverse circumstances. The study aim to analyze the impact of a prudential regulation on the Jordanian Banks liquidity. The specific objective in this case is; to determine whether the current prudential regulation enhance the banks liquidity in Jordan, or financial regulation still need additional updates. This study examines the impact of both Microprudential and Macroprudential regulation on Banks Liquidity Ratio, within the context of the Jordanian Banking Sector. To carry out the analysis, managed to collect the annual data for 12 listed during the period 2005-2018 with data arranged in the form of a panel, by using Random Effect Approach Regression, and compared the bank liquidity ratios during period before and after Global Financial Crisis (2008).The results indicate that Macroprudential tools have positive significant impact on Banks Liquidity Ratio, while micro is not. The main conclusions from this research indicate that while liquidity requirements tend to reduce liquidity risk, it appear to be more costly to comply with, reduced bank liquidity, and the banking sector still need additional Regulation updates to enhance banks Liquidity.
Prudential Regulation Tools, Banks Liquidity, Basel III Accord
To cite this article
Jamileh Ali Mustafa, The Impact of Prudential Regulation on Jordanian Banks Liquidity, International Journal of Business and Economics Research. Vol. 9, No. 5, 2020, pp. 352-357. doi: 10.11648/j.ijber.20200905.17
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This article is an open access article distributed under the Creative Commons Attribution License ( which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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