From Risk to Resilience: The Effect of Liquidity on African Banks' Performance

Abstract

The purpose of this study is to analyze the impact of liquidity on the financial performance of African banks. Employing the ARDL method on panel data from six African countries (Benin, Burkina Faso, Ivory Coast, Mali, Morocco, and Niger) over the 1999–2020 period, the analysis reveals a statistically significant positive correlation between liquidity and key performance indicators such as return on assets (ROA) and return on equity (ROE). These results align with global findings, underscoring the vital importance of effective liquidity management for optimizing bank performance in the African context.