Review of Article on Banks’ Liquidity Buffers and the Role of Liquidity Regulation

Question No. 1

The major purpose of this article is to evaluate the association among the liquidity holdings and banks’ policy environment and its analysis of the impacts of the banks’ policy environment on their liquidity holdings as well. Hence, by the definitions, it requires for using various proxies in this article. Another major purpose of this study is to examine whether the banks’ incentives are neutralized by the presence of liquidity regulation in order to hold the liquid asset. The central purpose of this paper is to investigate the banks’ liquidity holdings determinants for the various normal times. Moreover, this study also includes the measures of the market liquid assets that are held by the banks in order to guarantee the liquidity for constant funding (Bonner, Lelyveld, & Zymek, 2015)

There are several questions that can be raised from this article by the main question is how the banks’ incentives are neutralized by the liquidity regulation in order to hold the liquid assets? There are various other questions that are answered in this article, and one major question is that “What is the association among the liquidity holdings and banks’ policy environment”

Question No. 2

This article significantly contributes to the literature review by providing the various theories related to the financial terms, and this study also explores the various aspects related to the bank’s incentives, liquid assets, and liquidity ratios. This study can be the best fit for the literature review due to its unique concepts related to the association of the liquidity holdings and banks’ policy environment. This study is totally related to the literature review because this study agrees on the global analysis for the determinants of the bank’s asset holding and it also provides accurate knowledge for the liquidity regulation.

The article discusses all the efforts that are made to establish the reforms and about the liquidity risk frame under the new regulatory framework. In the research, the different global analysis is considered to determine the liquid assets of banks. The role of liquidity is also considered in the analysis. The research highlights the entire bank specified conditions and institutional variables for the shaping of banks and to consider risk management. The main purpose of the research was to measure whether the liquidity regulations can be used for the neutralization of bank incentives and to hold all the liquid assets. The results of the report reveal that without having liquidity regulations in the banks it could lead to the liquidity buffers to be determined and a combination is considered for the country-specific factors and bank-specific factors (Bonner, Lelyveld, & Zymek, 2015)