The effect of informational content of banking liquidity on the profitability of commercial banks "An applied study on Libyan commercial banks" during the period 2008-2016 "

Document Type : Original Article

Authors

1 Accounting department Faculty of Management and Technology Arab Academy for Science and Technology and Maritime Transport Alexandria Egypt

2 Business Information Systems Department, College of Management and Technology Arab Academy for Science and Technology and Maritime Transport Alexandria Egypt

Abstract

The research aims to study the impact of information content for banking liquidity on the profitability of Libyan commercial banks. The profitability of banks has been measured by the return on equity and return on assets and the liquidity through three rations; the ratio of liquid assets to total assets, total loans to total deposits and total deposits to total assets. In addition to measuring the ability of the Libyan banking administration to achieve profitability levels different levels of liquidity. So, the research problem was testing the effect of the liquidity level on the Libyan commercial banks profitability. Thus the main question of the research whether there any effect of information content for banking liquidity from 2008 until 2016 on the profitability of commercial banks in Libya?
The study followed the analytical descriptive method and the inductive method, based on the analysis of the financial statements using multiple regression analysis to test the hypotheses in addition to the use of descriptive statistics methods and Pearson correlation coefficient to show the nature of the relationship between the independent variables and their effect on the dependent variables this for the sixteen commercial banks. The results of the study revealed a significant adverse relationship between the banking liquidity represented by the ratio of liquid assets to total assets and profitability. While there is a significant positive correlation between the banking liquidity represented in the ratio of total loans to total deposits and the ratio of total deposits to total assets and profitability.
The study recommended the necessity of benefiting from the positive relationnship between the ratio of total loans to total deposits and total deposits to total assets and profitability. Commercial banks in Libya should continue to measure the impact of liquidity on the efficiency of asset management and the rate of financial leverage according to developments in the global banks to be able to continue in the system of financial globalization.

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