Impact of credit risk (NPLs) and Capital on Liquidity Risk of Namibian Banks

Impact of credit risk (NPLs) and Capital on Liquidity Risk of Namibian Banks | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Case Report Impact of credit risk (NPLs) and Capital on Liquidity Risk of Namibian Banks Samuel M Nuugulu, Margret Kasozi This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-6196502/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract Liquidity and credit risk are known to be key sources of default risk in banking institutions and bank capital is a buffer against financial risk. The purpose of this research is to study the effect of capital on liquidity risk as well as investigate the relationship between liquidity risk and credit risk in the form of NPLs in Namibian banks. The study uses bank specific data over the period of 2011-2021 from the four banking institutions in Namibia as well as economic data provided by Namibian Statistics Agency. The study was conducted by use of the Generalized Auto-Regressive Conditional Heteroskedasticity (GARCH) models which allowed us to identify reasons that were behind the shocks in liquidity in Namibia. To further identify changes in prohibitive linkages over the long term, the Dynamic Conditional Correlation Generalized Autoregressive Conditional Heteroskedasticity (DDC-GARCH) was employed. The empirical findings highlight the changes in the banking sector during the economic downturn experienced in the last 10 years. The finding also provide lessons for Africa as a whole and bring light to the suggestion that banking sectors in developing nations should strengthen their fiscal policies and make essential modifications to maintain bank profitability. Mathematics Subject Classification: 34A08, 65M06, 65N12, 35R11. Financial Mathematics Liquidity Risk Credit Risk and Banking Capital Full Text Additional Declarations The authors declare no competing interests. Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. 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Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-6196502","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Case Report","associatedPublications":[],"authors":[{"id":426748606,"identity":"ffbea337-73e0-4980-b987-57a04d892db9","order_by":0,"name":"Samuel M Nuugulu","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAAAt0lEQVRIiWNgGAWjYPACCwZ+UrVIMEg2kKzF4ACxauVn95hJfm2TSNx8I/fgpxsMd+QJajG4c8ZMWhaoZduNvGTpHIZnhgQdaCCRYyYtCdaSYwDUcpiRoBb5GVAtm2fkGP8GarEnqIXhRo6Z5Eeglg0g64BaEgk77EZasTXDOQnjGWfemFnnGBxOJsJhyRtv/iizke1vzzG+nVNx2Jaww4CAmQdhKTHqgYDxB5EKR8EoGAWjYIQCAKeYOiL4cf37AAAAAElFTkSuQmCC","orcid":"https://orcid.org/0000-0003-3966-5088","institution":"University of Namibia","correspondingAuthor":true,"prefix":"","firstName":"Samuel","middleName":"M","lastName":"Nuugulu","suffix":""},{"id":426748758,"identity":"e51d4903-004f-4436-816b-6c5dd71ffdb3","order_by":1,"name":"Margret Kasozi","email":"","orcid":"","institution":"University of Namibia","correspondingAuthor":false,"prefix":"","firstName":"Margret","middleName":"","lastName":"Kasozi","suffix":""}],"badges":[],"createdAt":"2025-03-10 14:32:46","currentVersionCode":1,"declarations":{"humanSubjects":false,"vertebrateSubjects":false,"conflictsOfInterestStatement":false,"humanSubjectEthicalGuidelines":false,"humanSubjectConsent":false,"humanSubjectClinicalTrial":false,"humanSubjectCaseReport":false,"vertebrateSubjectEthicalGuidelines":false},"doi":"10.21203/rs.3.rs-6196502/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-6196502/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":78320329,"identity":"be0166e9-4bb8-4ac3-8494-42e8095e7e17","added_by":"auto","created_at":"2025-03-12 04:57:15","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":591773,"visible":true,"origin":"","legend":"","description":"","filename":"Kasozi.pdf","url":"https://assets-eu.researchsquare.com/files/rs-6196502/v1_covered_b6599af9-fbd8-443c-8794-0538f1291358.pdf"}],"financialInterests":"The authors declare no competing interests.","formattedTitle":"\u003cp\u003eImpact of credit risk (NPLs) and Capital on Liquidity Risk of Namibian Banks\u003c/p\u003e","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":true,"hideJournal":true,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"Liquidity Risk, Credit Risk and Banking Capital","lastPublishedDoi":"10.21203/rs.3.rs-6196502/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-6196502/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eLiquidity and credit risk are known to be key sources of default risk in banking institutions and bank capital is a buffer against financial risk. 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