(Bourke, 1989) examined theinternal and external factors of profitability of twelve European, Australianand North American banks and the result of the study showed that liquidityratio measured by liquid assets to total assets is positively related to returnon assets (ROA).Al Nimer, Warrad, and Al Mari (2015) investigated the impact of liquidity throughquick ratio on profitability through return on asset (ROA)over the period of 2005 to 2011 for 15 Jordanian Banks listed at Amman Stock Exchange (ASE)and found that the independent variable quick ratio measured by cash plusshort-term marketable investments plus the receivables divided by currentliabilities has significant effect on dependent variable Return on Assets (ROA)means profitability of Jordanian banks is positively correlated with liquiditythrough quick ratio.Uremadu (2012) examined theimpact of bank capital structure and liquidity exploiting Nigerian data during the time period of1980 to 2006 and found thatthere is a positive effect of cash reserve ratio, corporate income tax andliquidity ratio.

They uniformly observed that liquidity ratio expedite banks’ profits in Nigeria, narrowly followed by balanceswith the central bank and thengross national savings and foreign private investments.Kosmidou, Tanna, and Pasiouras (2005) examined thebanking industry of United Kingdom over the period of 1995-2002 with anunbalanced panel data set of 224 observations and scrutinize the effect ofbank’s characteristics, financial market conditions and macroeconomicsituations on bank’s net interest margin NIM and return on average assets ROAAand concluded the result in the way that the ratio of liquid assets ispositively related to return on average assets ROAA and negatively related tonet interest margins NIM.Shen, Chen, Kao, and Yeh (2009) examined thedeterminants of bank performance in terms of liquidity risk and therelationship between bank liquidity risk and performance for 12 advancedeconomies over the period of 1994 to 2006 to estimate the reasons of liquidityrisk model.

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The effect of the study showed that liquidity risk is the internalfactor of bank performance measured by return on equity average, return onassets average and net interest margins and that it is positively related tonet interest margin NIM and negatively related to return on equity average andreturn on assets average.


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