Abstract
The global financial crisis had an enormous impact on financial institutions the world over,
and Pakistan was never an exemption. Hence this paper investigates the post-financial crisis
liquidity risk of conventional banks in Pakistan in consortium with the pre-financial
crisis-2008. Methodologically, 15 of 20 conventional banks were selected as a sample, while
paired sample t-test was instrumentalized to measuring the pre- and post-financial crisis
liquidity risk amongst the sampled banks. As part of the research objectives, the paper equally
looks at the chances of the bankruptcy of these institutions through the Altman's Z-Score tool.
The paper shows that liquidity risk in the pre and the immediate year following the financial
crisis was marginal and insignificant; however, the liquidity risk bar rises and becomes
pronounced in the following year. Though the allied demise in Pakistan financial market felt
the ruthlessness of this collapse is not comprehensive enough to demolish the financial
stability of Pakistan. In addition, despite the sounding performance of Pakistan banking
system in the pre and post-financial crisis, the Altman's Z-Score tool is indicative of
bankruptcy creeping up amongst the sampled banks in the near future
Muhammad Kashif Khan, Muhammad Azizullah Khan, Muhammad Ramzan, Syed Saad Ali. (2020) Liquidity Risk of Conventional Banking: A Case of Pre- and Post-Financial Crisis-2008 , Journal of Independent Studies and Research-Management, Social Sciences and Economics, Volume-18, Issue-1.
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