The impact of banks liquid reserve and food export on economic development during conflict
Abstract
Bank liquid reserve and food production provides a lifeline for effective and productive economic activities.
The objective of this paper is to analyse the effect of banks liquid reserve and food export on economic development during conflict and used Ukraine’s data as a case.
Problem statement. Bank liquidity position triggers a trade-off between bank credit risk performance and bank profitability. A delicate balancing act thus subsists between holding high liquidity at the expense of credit lending, investment boosting and economic growth, profit returns and credit risk incurrence.
Purpose of the article. The purpose of this article is to evaluate how a combined effect of bank liquidity and food export affects economic growth, the degree of growth and the slant of growth.
Unresolved aspects of the problem. there is scarcity of literature on the joint effect of bank liquidity and food export on economic growth of a country in conflict – particularly in contemporary Ukraine case.
Presentation of the main material. The paper applied a quantitative approach by using the multiple regression model to examine the relationships. Secondary data on bank liquid reserve, food export and GDP for Ukraine was collected from economic indicator data archives of the World Development Indicators.
Conclusions. Results from the analysis indicates that bank liquid reserve and food export have a significant impact on Ukraine’s economic performance during the war. The overall F-statistic is Signiant at P=0.000496. Furthermore, bank liquid reserve is significant at P=0.000495 with a positive regression coefficient of 122.3883. In addition, food export is significant at p=0.006234 with a negative regression coefficient of -131.289. The model’s coefficient of correlation is high at 0.884089 showing a close correlation. In addition, coefficient of determination (R2) is high at 0.781613 and adjusted R2 at 0.737936 which indicates a good model fit. The positive coefficient for bank liquid reserved indicates that bank liquid reserve has a positive and significant effect on Ukraine’s economy during the war, which implies that the capacity of banks to attract more liquid reserve provides significant assistance to Ukraine’s economic resilience during the time of conflict. Although food export is significant, but it has a negative coefficient emanating from the obstructions of exports logistics during the conflict as alternative routes of export comes at higher costs. The findings contribute to the literature by indicating that a healthy bank sector with sufficient liquid reserve is vital to support economic vibrancy and resilience during conflict.
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