Multiple large shareholders and liquidity risk: a SGMM analysis for the MENA banks

This study strives to shed some lights on the connection between multiple large shareholders and liquidity risk in the Middle East and North Africa (MENA) region. Across this region, this study focuses on conventional banks over the period from 2005 to 2020. According to the dispersion hypothesis, the System Generalized Method of Moment (SGMM) results states that multiple large shareholders (MLS) increase liquidity risk for both the loan to deposit ratio (LTD) ratio and the liquid assets to deposits and short-term funding ratio (LADSF). Nevertheless, following the alignment of interest's hypothesis, a coalition between the first and second largest shareholders reduces liquidity risk for both LTD and LADSF ratios. This study underscores the relevance of taking into account ownership composition among large shareholders in banking-related studies and provides valuable implications for both bankers and policymakers.