Interaction of Liquidity Creation, Regulatory Capital, and Risk Taking at ASEAN Banks Syarief Fauzie & Paidi Hidayat
Faculty of Economic and Business, University of Sumatera Utara
Abstract
The purpose of this study is to find out how the interaction between liquidity creation, regulatory capital, and risk-taking in the banking industry in ASEAN countries. The test in this study uses a panel vector auto-regression model to be able to see the interaction between the three variables. The research data used is quarterly data from banks listed on the stock exchange in the period 2009 - 2017. The results of the study indicate that there is a positive reciprocal relationship between regulatory capital and risk-taking. Also, the regulatory capital regulations of the previous four quarters reduced liquidity creation. The results also show that there is no interaction between liquidity creation and risk-taking.
