Acta Univ. Agric. Silvic. Mendelianae Brun. 2012, 60(7), 463-476 | DOI: 10.11118/actaun201260070463

Liquidity of Czech and Slovak commercial banks

Pavla Vodová
Katedra financí, Obchodně podnikatelská fakulta, Slezská univerzita Opava, Univerzitní nám. 1934/33, 733 40 Karviná, Česká republika

As liquidity problems of some banks during global financial crisis re-emphasized, liquidity is very important for functioning of financial markets and the banking sector. The aim of this paper is therefore to evaluate comprehensively the liquidity positions of Czech and Slovak commercial banks via different liquidity ratios in the period of 2001-2010 and to find out whether the strategy for liquidity management differs by the size of the bank. We used unconsolidated balance sheet data over the period from 2001 to 2010 which were obtained from annual reports of Czech and Slovak banks. The sample includes significant part of Czech and Slovak banking sector (not only by the number of banks, but also by their share on total banking assets). We have calculated five different liquidity ratios for each bank in the sample. The results showed that liquidity of Czech banks has declined during last ten years. On the contrary, liquidity of Slovak banks fluctuated only slightly during the period 2001-2008. Bank liquidity has fallen due to the financial crisis in both countries; the impact is worse for Slovak banks. Both Czech and Slovak banks have become less liquid also as a result of increase in lending activity. Czech and Slovak banks have the same strategies how to insure against liquidity crises: big banks rely on the interbank market or on a liquidity assistance of the Lender of Last Resort, small and medium sized banks hold buffer of liquid assets.

Keywords: liquidity, liquidity risk, liquidity ratio, liquid assets, Czech Republic, Slovakia, financial crisis
Grants and funding:

This paper was prepared with financial support of Czech Science Foundation (Project GAČR P403/11/P243: Liquidity risk of commercial banks in the Visegrad countries).

Received: February 27, 2012; Published: July 2, 2013  Show citation

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Vodová, P. (2012). Liquidity of Czech and Slovak commercial banks. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 60(7), 463-476. doi: 10.11118/actaun201260070463
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