Abstract:

It is extremely important for banks to maintain a liquid asset at an optimal level against the liquidity risk resulting from the non-compatibility, in order to maintain the confidence of the market and customers. However, the profitability of holding a liquid asset is also concerned with the cost of opportunity. The aim of this research is to investigate the relationship of liquidity in commercial banks with profitability. The study included 20 commercial banks operating in Turkey in the period 2002-2020, and the financial data on the banks took into account quarter periods from the end of 2002 to the end of 2020. The panel data analytics method has made predictions from predictors that could produce resistant standard errors using Driscoll-Kraay, Parks-Kmenta and Beck-Katz methods. The study found that the liquid asset rate and the active profit rate of the currency rate were positive, the self-source profit rate and the net interest margin were negative, the active profit rate of the acid-test rate was negative, the self-source profit rate and the net interest margin were positive, the credit/investment rate affected the profit rate in the negative direction, the findings indicated a negative relationship between liquidity and profit in general.

Keywords: