Liquidity of Slovak Commercial Banks and its Determinants

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 identify determinants of liquidity of Slovak commercial banks. The data cover the period from 2001 to 2010. The results of panel data regression analysis showed that bank liquidity drops mainly as a result of the financial crisis. Bank liquid assets decreases also with higher bank profitability, higher capital adequacy and with the size of bank. Liquidity measured by lending activity of banks increases with the growth of gross domestic product and bank profitability and decreases with higher unemployment.