Abstract
Banks are the main part of financial sector in each economy and strength of banking system becomes vital for ensuringfavourable economic stability and growth. Recent failure of two commercial banks in Lithuania showed that managershaven’t evaluated liquidity risk or haven’t dealt with it properly. The tasks of the paper are to investigate Lithuanian banksposition towards liquidity risk, analyse what kind of management tools banks use for ensuring favourable position towardsliquidity and to explore the liquidity influence to profitability in Lithuanian banking sector. The article examines liquidity andits management processes in Lithuanian banking sector. Description of liquidity importance is presented. Liquidity risk and itsmeasurement as well as the ways of managing the above mentioned risk is analysed in the article. In order to analyse the relationshipbetween liquidity risk and profitability of banks, analysis of scientific literature, research synthesis and generalizationshave been made. Išanalizuota likvidumo svarba ir jo įtaka Lietuvos bankų veiklai.Išnagrinėti ir pateikti likvidumo vadybos bei valdymo Lietuvosbankininkystės sektoriuje principai. Likvidumo svarbos analizėpateikta ir apibendrintai, remiantis istoriniais įvykiais bei mokslinėsliteratūros apžvalga. Išnagrinėtos skirtinguose šaltiniuosevartojamos likvidumo sąvokos. Pateikta likvidumo rizikos irjos valdymo būdų apžvalga, aprašyti likvidumo vertinimo komponentai.Iškeltos ir aprašytos hipotezės ryšiui tarp likvidumoir pelningumo nustatyti bei pateikta siūlymų tolesniam tyrimui.
Highlights
In today’s context of globalization, the strength of banking system becomes vital for ensuring favorable economic stability and growth
In order to achieve the aim such tasks should be implemented: to describe the liquidity risk, as well as to identify importance of stable position towards liquidity, to identify what means for liquidity risk measurement can be used, analyze what kind of management tools can be applied in banks for ensuring favorable position towards liquidity and lastly – to describe in what possible manner liquidity influence to profitability in Lithuanian banking sector could be explored
The liquidity means companies’ ability to cover its obligations without experiencing losses
Summary
In today’s context of globalization, the strength of banking system becomes vital for ensuring favorable economic stability and growth. Banks stimulate the smoothness in goods and services markets and provide possibility to market members to make productive investments In this manner banks stimulate innovation and help to develop new industries, what leads to improved employment rate and overall stability of the economic (Arif, Nauman 2012). In order to achieve the aim such tasks should be implemented: to describe the liquidity risk, as well as to identify importance of stable position towards liquidity, to identify what means for liquidity risk measurement can be used, analyze what kind of management tools can be applied in banks for ensuring favorable position towards liquidity and lastly – to describe in what possible manner liquidity influence to profitability in Lithuanian banking sector could be explored. In order to fulfill tasks and achieve the aim of the paper analysis of scientific literature and normative documents, comparison and synthesis was made
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