العلاقة بين السيولة و الربحية في القطاع المصرفي بالمملكة العربية السعودية

Abstract EN

The aim of this research is to study the relationship between liquidity and profitability in the Saudi banking sector.

The sample of the study included six Saudi banks during the period 2010-2016.

The focus was on a range of financial ratios.

Panel data analysis was used and depended on Panel Least Squares method and focused on Fixed Effects method and Granger Causality Tests to test the hypothesis.

A number of results have been found: there are statistically significant relations between liquidity indexes: (cash to current deposits, cash to total deposits, cash to total liabilities, and investment ratio) and between profitability indexes: (return on assets, return on equity, return on deposits, and earning per share).

The study also indicated that there is not statistically significant trade-off relation between liquidity and profitability indexes.

A number of recommendations related to the research findings have been proposed the most important is urging Saudi banks to focus on balancing liquidity and profitability, and measuring and analyzing liquidity indexes that have the strongest impact on profitability indexes.