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The purpose of this study is to investigate the value of analyst coverage on the covered firms.

To isolate the value impact of analyst coverage, the study focuses on a unique set of firms that receive analyst coverage for the first time after having been traded in an exchange for at least one year. Event study and ordinary least square regressions are used to test the hypotheses.

There is a significant and positive price reaction at the time of the announcement of analyst coverage initiations. However, unlike the coverage initiations around the initial public offers (IPOs), the price impact is not related to the reputation of the analyst firm, the exchange listing or whether the analyst firm is also the IPO underwriter. The sample firms do not experience significant reduction in the level of information asymmetry but experience a significant increase in liquidity. The increase in liquidity only occurs after the coverage initiations. The increase in liquidity is not explained by the increase in institutional investors' interest. Finally, the price impact around a coverage initiation is positively related to the change in liquidity.

The findings suggest that firms benefit from analyst coverage through an improvement in liquidity.

This is the first study to focus on the analysts' first‐time coverage initiations. It argues that focusing on the first‐time coverage initiations provides a better analysis of the effects of analyst activities on the firm value.

This paper aims to investigate the potential impact of the Basel III liquidity requirements, namely, the net stable funding ratio (NSFR) and the liquidity coverage ratio (LCR), on bank liquidity creation.

The authors developed a dynamic panel model using the Quasi-Maximum Likelihood estimation on an unbalanced panel dataset of 129 commercial banks operating in 10 Middle Eastern and North African (MENA) countries from 2009 to 2017.

The results show that the NSFR significantly negatively affects liquidity creation. Similarly, the LCR exerts a substantial negative impact on the liquidity creation of the sampled MENA banks. These findings suggest that complying with both liquidity requirements tends to curtail liquidity creation. Moreover, further regression analysis of large and small bank sub-samples uncovered results similar to the overall MENA sample.

The findings raise interesting policy implications and suggest a trade-off between the benefits of the financial resiliency induced by implementing liquidity requirements and the creation of liquidity essential for promoting economic growth in the region.

Most empirical research focuses on the relationship between bank capital and liquidity creation. To the knowledge, this paper is the first to provide empirical evidence on the effect of both the NSFR and LCR regulatory liquidity standards on bank liquidity creation in the MENA region.

This study aims to examine the effect of Saudi bank’s financial stability on risk management.

Different ordinary least square models have been used to study the significant effect of banks’ financial stability indicators on different types of risks in Saudi banks. Financial statements were collected of all Saudi banks (12 banks) from 2011 to 2014 from TADAWL website.

The results indicate a negative and significant effect of capital adequacy ratio on credit risk. Also, there is a significant and positive effect of leverage ratio on credit risk. Moreover, the results indicate negative and significant effect of provisions, leverage, ratio of loans to deposits and bank size on liquidity risk. Finally, results indicate a positive and significant effect of capital adequacy, provisions, leverage and asset utilization ratio on operational risk and indicate a negative and significant effect of loan-to-deposits ratio on operational risk. A robustness check was used to confirm the results. No differences between small and large Saudi banks was found. All banks are committed to apply Basel accord and Saudi Arabian Monetary Agency (SAMA) regulations. But there is a significant difference in applying SAMA toolkits regulations between 2011 and 2014. The 2014 results reflect very high degree of financial stability in Saudi banks when compared with that of 2011, also greater ability to mitigate risk exposure using different types of macroprudential toolkits stated by SAMA.

The study is limited to Saudi Banks from 2011 to 2014.

This is the first paper to use the macroprudential toolkits, suggested by SAMA as financial stability measurements, to examine their effect on different types of risks in Saudi banks. SAMA suggested this group of toolkits to comply with Basel III new regulations and to minimize the degree of risk exposure of Saudi banks.

This study aims to demonstrate and measure the impact of liquidity shocks on a bank’s solvency, especially when the bank does not hold sufficient liquid assets.

The proposed model is an extension of Merton’s (1974) model. It assesses the bank’s probability of default over one or two (short) periods relative to liquidity shocks. The shock scenarios are materialised by different net demands for the withdrawal of funds (NDWF) and may lead the bank to sell illiquid assets at a depreciated value. We consider the possibility of second-round effects at the beginning of the second period by introducing the probability of their occurrence. This probability depends on the proportion of illiquid assets put up for sale following the initial shock in different dependency scenarios.

We observe a positive relationship between the initial NDWF and the bank’s probability of default (particularly over the second period, which is conditional on the second-round effects). However, this relationship is not linear, and a significant proportion of liquid assets makes it possible to attenuate or even eliminate the effects of shock scenarios on bank solvency.

The proposed model enables banks to determine the necessary level of liquid assets, allowing them to resist (i.e. remain solvent) different liquidity shock scenarios for both periods (including eventual second-round effects) under the assumptions considered. Therefore, it can contribute to complementing or improving current internal liquidity adequacy assessment processes (ILAAPs).

The proposed microprudential approach consists of measuring the impact of liquidity risk on a bank’s solvency, complementing the current prudential framework in which these two topics are treated separately. It also complements the existing literature, in which the impact of liquidity risk on solvency risk has not been sufficiently studied. Finally, our model allows banks to manage liquidity using a solvency approach.

The purpose of this study is to investigate factors influencing the net stable funding ratio (NSFR) in the Islamic banking system. More specifically, the authors analyze the impact of the deposit structure on the liquidity ratio using the two-step generalized method of moments approach during the 2000–2014 period.

Based on IFSB-12 and the GN-6, the authors calculated the NSFR for 35 Islamic banks operating in the Middle East and North Africa (MENA) region.

The findings of this study show the following: first, ratio of profit-sharing investment accounts have a positive impact on the NSFR, while ratio of non profit-sharing investment accounts increase the maturity transformation risk; second, the results highlight that asset risk, bank capital and the business cycle have a positive impact on the liquidity ratio, while the returns on assets, bank size and market concentration have a negative impact; and third, these results support the IFSB’s efforts in developing guidelines for modifying the NSFR to enhance the liquidity risk management of institutions offering Islamic financial services.

The most prominent limitation of this research is the availability of data.

These results will be useful for authorities and policy makers seeking to clarify the implications of adopting the liquidity requirement for banking behavior.

This study contributes to the knowledge in this area by improving our understanding of liquidity risk management during liquidity stress periods. It analyzes the modified NSFR that was adopted by the IFSB. Besides, this study fills a gap in the literature. Previous studies have used the conventional ratios to determinate the main factors of the maturity transformation risk in a full-fledged Islamic bank based on an early version of NSFR. Finally, most studies focus on the NSFR as proposed by the Basel Committee, whereas the authors investigate the case of the dual-banking system in the emerging economies of seven Arab countries in the MENA region.

This study aims to cover an important yet largely under-explored topic: the dynamic process of bank liquidity management in a vast developing economy by considering pool of funds hypothesis, signaling hypothesis and risk management hypothesis.

The authors apply the dynamic common correlated effect (DCCE) method with an error correction model format to a long panel datasets of 84 Indonesian banks from January 2003 to August 2019, resulting in 16,800 observations.

The authors obtain convincing evidence of dynamic liquidity management with an error correction mechanism. The time needed to adjust to a liquidity shock ranges from 2.5 to 3.5 months. The empirical results strongly support the pool of funds and signaling hypotheses, whereas risk management motive appears to have secondary importance.

The regulator should also encourage banks to diversify liquidity management to include interbank money market and off-balance-sheet instruments. The current condition shows that bank liquidity management is strongly correlated with intermediation dynamics and thus is contracyclical. Banks could end up with tight liquidity in a booming economy, which would pose a severe risk to their financial standing.

To authors’ knowledge, this study is the first to analyze bank liquidity management behavior empirically using a panel error correction mechanism. Here, the authors also try to combine a practitioner perspective with a scientific one.

This paper aims to propose a liquidity management solution for Islamic financial institutions (IFIs) that concurs with sustainable development and financial stability.

The study is a qualitative research. It uses the exploratory research methodology, specifically the content analysis approach, to gather primary data and identify and interpret relevant secondary data and Sharīʿah concepts. The purpose is to develop a liquidity management solution for IFIs. The proposal is based on the Unleveraged Green Investment Trust (UGIT) model, which is consistent with Basel III regulatory requirements. In developing the UGIT model, the exploratory research was complemented by a case study to examine the UGIT solution for the particular case of renewable energy.

The model demonstrates how financial innovation can meet both financial stability and sustainable development objectives, thereby achieving the spirit of Islamic finance. The structure further highlights the importance of regulatory and fiscal frameworks to enhance liquidity management and investor appeal for green financial instruments.

This study suggests a structure of UGIT to enable IFIs to meet their liquidity management needs while promoting sustainable development.