Impact of Liquidity Coverage Ratio on Performance of Select Indian Banks

The post-crisis liquidity framework improves banking stability by imposing stricter requirements. However, consistent bank performance continues to be an essential factor in achieving this goal. This study examines the impact of coverage ratio (LCR) on profitability and non-performing assets (NPAs) Indian banks using annual data from 2010 2019. By applying dynamic panel regression technique, we found that compliance with minimum level LCR reduces net interest margins (NIMs) due a narrower spread, thereby impacting profitability. Moreover, NPAs tend grow increase LCR. study’s findings have far-reaching implications for policymakers. policymakers/regulators need understand strategies used meet standards and, if necessary, revisit policy achieve better results. establishes foundation can conducting similar research other complex geographies such as India.