Factors Influencing Liquidity Risk of Banks in Haiti

This study investigates the drivers of liquidity risk in the Haitian banking sector, a critical yet under-researched area of financial stability. Using data from 7 banks (5 private and 2 public) over 308 observations between 2013 and 2023, the study employs key liquidity ratios—liquid assets to total assets and liquid assets to deposits—as measures of risk. Panel data regression techniques, including Pooled OLS, Fixed Effect, and Random Effect models, are utilized, with the Hausman test favoring Fixed Effect models. The findings indicate that capital adequacy, asset quality (non-performing loans ratio), efficiency (cost-to-income ratio), deposits (total deposits to total assets), and net interest margin (as a percentage of interest income) positively and significantly influence liquidity risk. In contrast, profitability (return on assets) and bank size show no significant impact. These results underscore the importance of managing capital adequacy, asset quality, and deposit growth to mitigate liquidity risk. Practitioners and the Central Bank can leverage these insights to strengthen the resilience and stability of the Haitian banking sector.