Dimensions of liquidity and their factors in the Slovenian banking sector

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Technical university of Liberec, Czech Republic
Technická Univerzita v Liberci
The present article focuses on the internal factors which have potential influence on the liquidity of the Slovenian banking sector. Unlike other studies, this paper uses multiple dependent variables, encompassing different views on liquidity and leading to higher complexity. These include the creation of liquidity, its outflow, net change and total reallocation, determined on the basis of a specific method of liquidity measurement – the gross liquidity flows. The chosen independent variables include various items of internal character such as loans, deposits, profit, capital and the size of the bank. Robust regression analyses are performed. The results indicate that internal factors have the greatest influence on the creation of liquidity, where almost all the variables considered were significant. Used factors do not only affect liquidity creation, often investigated by authors, but affect other dimensions of liquidity as well. A significant item which played a role in multiple dimensions of liquidity was the value of loans and the size of the bank (total assets). The models have shown that any given factor only has an influence on the creation of liquidity without influencing its outflow and vice versa. Thus, when looking for determinants only for the creation or only for the outflow of liquidity, the results need not necessarily comprehensively show the influence of the given factors, and can lead to erroneous conclusions. It is therefore suitable to include multiple views on the value of liquidity, since the influence of a factor can be more dominant in a different dimension of liquidity and affect the final value.
slovenian banking sector, dimension of liquidity, liquidity determinants, internal factors