LIQUIDTY RISK MANAGEMENTIN AZERBAIJAN BANKING SECTOR

Risk and risk management in financial markets is one of the issues that researchers are most interested in. Over the years, a number of finance theories have been developed and models have been designed. However, there is little work on liquidity risk management. Liquidity risk management studies are generally aimed at determining the factors that increase and decrease the liquidity risk of banks. Liquidity risk, which is one of the important risks of the banking sector, is defined as not having adequate liquidity for financial institution liabilities. Liquidity risk management involves the efforts of financial institutions to balance sufficient liquidity and non-liquidity costs. Liquidity risk plays an important role in banking crises. 2008 After the global crisis, bankruptcy of large financial institutions led to the emergence of liquidity risk management. The Azerbaijani economy, naturally, has been adversely affected by the global crisis. This study has two main goals. The first of these is to measure the liquidity risk in Azerbaijan financial sector, based on Berger and Bouwman (2009) and Deep and Schaefer (2004) methodology. The other goal is to model the relationship between the two liquidity risk ratios and other explanatory factors. Panel data analysis applied in this study indicates on the fact that there is statistically significant relationship between liquidity transformation ratio developed using Deep ve Schaefer methodology and insured deposits to total deposits, deposit interest rate, return on asset, non-performing loans, deposit total liabilities ratio, oil prices, return on equity and bank size