Liquidity Risk Management Strategies and Their Impact on Shareholder Value: An In-Depth Case Analysis of Global Banks in the Midst of Post-Pandemic Economic Uncertainty.

Abstract

Purpose: This study aims to explore how global banks manage the trade-off between liquidity risk and profitability and how these strategies affect shareholder value amid post-pandemic economic uncertainty. The research seeks to provide a deeper understanding of the managerial rationale and strategic decision-making process behind liquidity management and profit optimization.

Methodology/approach: This study adopts a qualitative content analysis approach based on multiple case studies of cross-border banks between 2020 and 2024. The data were collected from publicly available documents, including annual reports, risk management reports, and corporate governance disclosures. The analysis identifies key themes and strategic narratives that reflect how bank executives communicate and manage liquidity–profitability dilemmas within various regulatory and institutional contexts.

Results/findings: The findings reveal that higher liquidity risk tends to negatively affect profitability, which subsequently serves as a signal of market value. The study also finds that differences in governance quality and regulatory enforcement across countries play a crucial moderating role in shaping banks’ risk management and disclosure strategies.

Conclusions: Banks recognize liquidity retention as a necessary regulatory compliance but also as a strategic trade-off that reduces profitability. Profitability, in turn, is used as a key communication tool to signal financial resilience and enhance shareholder value. Governance and regulatory quality significantly influence these strategic choices and the credibility of value disclosure.

Limitations: This study relies solely on publicly available documents without primary data collection, which may limit the depth of managerial perspectives.

Contribution: The study contributes to the literature on liquidity risk and value creation by providing a qualitative and contextual perspective on how Banks balance risk and profitability. It offers practical insights for regulators, bank managers, and investors in understanding strategic financial decision-making in the post-pandemic era