The impact of liquidity on the profitability of banks: an applied study on a group of Algerian banks for the period 2007-2018 using panel models

Abstract

The study aims to test the relationship between liquidity and bank profitability, where the cash balance rate and lending rate indicators were identified as liquidity variables while the rate of return on assets was chosen as a profitability variable, and panel data analysis for 2007-2018 was usedon a group of five Algerian banks. The results of the study showed a negative adverse correlation between the cash balance rate and the rate of return on assets while the package had a positive impact between the lending rate and the rate of return on assets, and that the random- effects model was best suited for the sample banks of the study.