The paper investigates how income diversification and capital adequacy affect the liquidity creation of banks in Kenya … GMM) in the analysis. The findings suggest a positive linkage exists between income diversification and the liquidity …

stability estimate. Secondly, a proxy for bank competition is computed using the Panzar-Rosse H-statistic. Finally, we regress … the Bank Stability Index against competition as measured by the H-Statistic, controlling for business cycles and some bank … specific features including efficiency. The empirical results show a negative relationship between competition and bank …