What the study found
The study found that rising credit risk is associated with banks hoarding liquidity, meaning they shift assets toward liquid instruments and reduce off-balance-sheet exposures. It also found that stronger corruption control weakens this risk-averse response, while global uncertainty strengthens it.
Why the authors say this matters
The authors conclude that the findings have policy implications for credit risk management, institutional reform, and targeted small and medium-sized enterprise financing. They say these steps matter for supporting financial intermediation and sustainable economic growth in emerging and developing markets.
What the researchers tested
The researchers used a fixed-effects panel model on an unbalanced panel of 474 commercial banks across 47 African countries from 2013 to 2022. They also used a two-step system generalized method of moments (GMM) estimator to address possible endogeneity, plus bank-size subsamples and alternative proxies.
What worked and what didn't
The main pattern reported was that higher credit risk was linked to more liquidity hoarding. Stronger corruption control appeared to reduce that effect, while global uncertainty appeared to amplify it.
What to keep in mind
The abstract does not describe detailed limitations beyond noting the use of robustness checks. The findings are based on commercial banks in African countries over the 2013 to 2022 period.
Key points
- Higher credit risk was associated with banks holding more liquid assets.
- Banks also scaled back off-balance-sheet exposures when credit risk rose.
- Stronger corruption control reduced the liquidity-hoarding response.
- Global uncertainty increased the liquidity-hoarding response.
- The study used data from 474 commercial banks in 47 African countries.
Disclosure
- Research title:
- Credit risk is linked to liquidity hoarding in African banks
- Authors:
- Anas Alaoui Mdaghri, Abdessamad Raghibi, Abdelhamid Ait Bihi
- Institutions:
- Université Ibn Zohr, Université Ibn Zohr, Université Ibn Zohr
- Publication date:
- 2026-02-24
- OpenAlex record:
- View
Get the weekly research newsletter
Stay current with scholarly research without reading academic papers — one filtered digest, every Friday.