COVID-19, Liquidity and Financial Health: Empirical Evidence from South Asian Economy

Asian Journal of Economics and Banking, Vol. 5, No. 3, pp. 307-323.

17 Pages Posted: 12 Sep 2022

See all articles by Md. Rezaul Karim

Md. Rezaul Karim

University of Dhaka

Samia Afrin Shetu

University of Dhaka

Sultana Razia

University of Dhaka - Department of Accounting & Information Systems

Date Written: 2021

Abstract

Purpose – The pandemic COVID-19 has affected every sector of an economy in every possible way. Banking sector of Bangladesh has been affected by it badly. The purpose of this paper is to find out the impact of COVID-19 on the liquidity and financial health of the listed banks in Bangladesh.

Design/methodology/approach – Liquidity ratios are calculated to measure the liquidity condition of the banks and revised Altman’s Z-Score Model for non-manufacturing companies is used to measure the financial health. The ratios are compared before and during the COVID-19 periods to assess the impact.

Findings – The findings of this study indicate a deterioration of liquidity position and financial health of the listed banks after the emergence of this pandemic. Though the banks have poor liquidity ratios and financial health prior to the emergence of this pandemic, they have decreased more in the second quarter of 2020. Most of the banks have poor liquidity ratios and cash position. The listed Islamic Banks have poor financial health than the listed Commercial Banks and all the banks belong to the red zone in all the quarters.

Practical implications –The results of this study will have policy implications for companies and regulators of money market.

Originality/value – This paper is a pioneer initiative in assessing the impact of COVID-19 pandemic on liquidity and financial health based on empirical data

Keywords: COVID-19, Liquidity, Financial Health, Z-Score

Suggested Citation

Karim, Md. Rezaul and Shetu, Samia Afrin and Razia, Sultana, COVID-19, Liquidity and Financial Health: Empirical Evidence from South Asian Economy (2021). Asian Journal of Economics and Banking, Vol. 5, No. 3, pp. 307-323., Available at SSRN: https://ssrn.com/abstract=4116737 or http://dx.doi.org/10.2139/ssrn.4116737

Md. Rezaul Karim (Contact Author)

University of Dhaka ( email )

Department of Accounting & Information Systems,
University of Dhaka
Dhaka, 1000
Bangladesh

Samia Afrin Shetu

University of Dhaka ( email )

Department of Tourism and Hospitality Management
University of Dhaka
Dhaka, 1000
Bangladesh

Sultana Razia

University of Dhaka - Department of Accounting & Information Systems ( email )

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