Monetary and Currency Policies and Liquidity Risk of Commercial Banks with Emphasis on the Sanctions Period

Document Type : Research Article

Authors

1 PhD in Economics, Department of Economics, Faculty of Humanities, Firuzkoh branch, Islamic Azad University, Firuzkoh, Iran

2 Associate Professor, Department of Economics, Faculty of Humanities, Firuzkoh branch, Islamic Azad University, Firuzkoh, Iran

3 Assistant Professor, Department of Economics, Faculty of Humanities, Firuzkoh branch, Islamic Azad University, Firuzkoh, Iran.

https://dx.doi.org/10.22084/aes.2023.27214.3543

Abstract

The policies used by governments in emerging and developing economies during the financial transition have always faced the question of what impact the central bank’s interventionist monetary and currency policies have had on banks’ risk-taking. In this research, the impact of monetary and foreign exchange policy on the risk-taking of commercial banks was investigated, and in this way, a sample consisting of 15 stock-exchange banks from 1386 to 1400 was investigated using the quintile regression method and the state space method. The estimation results showed that monetary and currency policies have a positive relationship with liquidity risk. In addition, the findings showed that with the beginning of sanctions, the liquidity risk of banks has increased and the impact of monetary and currency policies on larger banks has increased. Therefore, small banks are less likely to go bankrupt compared to large banks.

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References

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Journal of Applied Economics Studies in Iran
Volume 13, Issue 49
May 2024
Pages 131-154

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