Abstract
Financial system stability has been gaining crucial consideration on both, national and international levels in terms of structural, institutional and macroeconomic aspects. Money as a medium of exchange and banks as an intermediary cannot be comprehended by visualizing a world without them. It can be observed that old modalities of the banking system have been replaced by many innovations in the new millennium. To evaluate the soundness and steadiness of a banking sector, it is considered imperative to associate the banking system with its liquidity position. Therefore, this research is conducted to determine the influence of bank-specific and macro environmental variables on commercial banks' liquidity in Pakistan. The data is taken from 20 commercial banks over the period2009 to 2018. Different panel data regression models are used. The study found that leverage (LEV) and capital adequacy ratio (CAR) have a negative but significant impact on the liquidity of the banks.Moreover, the exchange rate (FER) was found to have a positive and significant effect on the liquidity of commercial banks. Furthermore, there is insignificant relation between asset size (SIZE), government deficit financing (GDF) and inflation rate (INF) with the bankâÂÂs liquidity.
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