Funding Liquidity and Risk-Taking: Evidence from the Commercial Banks of Pakistan

This study aims to examine the impact of funding liquidity risk on banks’ appetite using annual data from 23 commercial banks listed Pakistan Stock Exchange for period 10 years, i.e., 2011-2020. The finds that with lower (as measured by ratio deposits total assets) take higher risk. result showed increasing deposition leads an increase in Loan Loss Provision (LLP), -Z-score, and standard deviation bank stock returns (SRV). However, size capital buffer have a significant event excessive deposits. outcome has practical implications banking regulators encourage requirements banks. Thus would customers confidence reducing danger run disciplining taking behavior