Bank Liquidity during COVID-19 Pandemic : Evidence from Bangladesh

The Banking sector of Bangladesh had been struggling with poor performance before the COVID-19 situation. The reson behind as Non-performing loans, declining margins in a capped interest rate regime, deteriorations in various efficiency indicators, government-directed restructuring of loans. Now the COVID-19 pandemic has put this sector into further stress. This study examines the impact of COVID-19 on the bank's liquidity by using Pooled Ordinary Least Square (Pooled OLS) on a data-set of 20 Bangladeshi commercial banks covering the period from 8 March to 30 November 2020 and the daily COVID-19 affected and death cases. When finding the bank's liquidity response to COVID-19, we also elevate the interacting relationship between the government action variables and the Trend in COVID-19 affected and death cases.We find that social distancing and government economic support significantly affect the bank's liquidity. More interesting, remittance is the key drivers to take stable of the banking liquidity in Bangladesh. As there is frugality of literature regarding bank liquidity during the COVID-19 pandemic, this study will be a unique study on Bangladesh. The study results will be beneficial for other developing countries with the same economies