Social unrest and bank liquidity creation: evidence from MENA banks
Abstract
Purpose
A host of studies have assessed the determinants of bank liquidity creation, highlighting the relevance of macroeconomic and microeconomic factors. However, whether and how social unrest impacts bank liquidity creation remains a moot issue. To inform this debate, this study aims to exploit bank-level data for Middle East and North Africa (MENA) countries covering the period 2010–2019 to assess the interlinkage between social unrest and bank liquidity creation.
Design/methodology/approach
In view of the staggered inception of social unrest across MENA countries, the author uses a difference-in-differences specification to tease out the causal impact.
Findings
The findings reveal that the Arab Spring improves liquidity creation after onboarding after confounding factors. This impact differs across conventional and Islamic banks and differs across asset side (market) and liability side (funding) liquidity creation. The evidence also underscores the positive real effects of such liquidity creation on real economic output.
Originality/value
This is one of the early studies exploiting a large sample of MENA banks to examine this issue in a systematic manner.
Keywords
Acknowledgements
The author take this opportunity to profusely thank the editor (Prof. Frank Mixon) for the additional suggestions and in particular, two anonymous referees for the incisive comments on an earlier draft. This enabled us to significantly improve the analysis. Needless to state, the views expressed and the approach pursued in the paper solely reflects the author’s personal views.
Citation
Ghosh, S. (2024), "Social unrest and bank liquidity creation: evidence from MENA banks", Journal of Financial Economic Policy, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JFEP-09-2023-0257
Publisher
:Emerald Publishing Limited
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