The determinants of banks' liquidity buffers in Central America

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dc.description.abstract Banks’ liquidity holdings are comfortably above legal or prudential requirements in most Central American countries. While good for financial stability, high systemic liquidity may nonetheless hinder monetary policy transmission and financial markets development. Using a panel of about 100 commercial banks from the region, we find that the demand for precautionary liquidity buffers is associated with measures of bank size, profitability, capitalization, and financial development. Deposit dollarization is also associated with higher liquidity, reinforcing the monetary policy and market development challenges in highly dollarized economies. Improvements in supervision and measures to promote dedollarization, including developing local currency capital markets, would help enhance financial systems’ efficiency and promote intermediation in the region. en
dc.title The determinants of banks' liquidity buffers in Central America en
dc.contributor.author Delechat, Corinne
dc.contributor.author Henao, Camila
dc.contributor.author Muthoora, Priscilla
dc.contributor.author Vtyurina, Svetlana
dc.date.accessioned 2014-10-23T17:00:42Z
dc.date.available 2014-10-23T17:00:42Z
dc.date.issued 2014-10-23
dc.identifier.uri http://hdl.handle.net/123456789/12550
dc.description Working Paper
dc.language.iso en
dc.subject Central America
dc.subject Bank liquidity
dc.subject Credit
dc.subject Dollarization
dc.subject Excess liquidity
dc.subject Foreign banks
dc.type Article
lacea.language.supported en

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