Semnan University Journal of Econometric Modelling 2345-654X 7 4 2023 02 20 The Role of Liquidity Management on Profitability of the Banks The Role of Liquidity Management on Profitability of the Banks 37 64 7456 10.22075/jem.2023.27735.1750 FA Alireza Erfani Professor of economics department, Semnan University Mohammad Amin Heydari Master of economics from Semnan university Journal Article 2022 07 12 The banking system, as one of the most effective sectors of the economy, by collecting a significant part of the available liquidity and directing it to the productive sectors, causes economic prosperity.The profitability of banks depends on a set of internal and external factors, of which liquidity management is the most important. In order to earn profit, banks must manage their liquidity in such a way as to meet their obligations and avoid wasting investment opportunities. In this research, by examining the effective indicators on liquidity management, a composite index that represents the level of bank liquidity management was calculated and introduced. Then, using the annual data of 16 banks in the period (2006-2021), the effect of liquidity management on banks' profitability was investigated using the generalized moments method (GMM), two-stage Arellano-Bond. The results show that liquidity management has the most positive effect on the profitability of banks, so that in private and semi-state banks, the intensity of this effect is greater than in state banks. The banking system, as one of the most effective sectors of the economy, by collecting a significant part of the available liquidity and directing it to the productive sectors, causes economic prosperity.The profitability of banks depends on a set of internal and external factors, of which liquidity management is the most important. In order to earn profit, banks must manage their liquidity in such a way as to meet their obligations and avoid wasting investment opportunities. In this research, by examining the effective indicators on liquidity management, a composite index that represents the level of bank liquidity management was calculated and introduced. Then, using the annual data of 16 banks in the period (2006-2021), the effect of liquidity management on banks' profitability was investigated using the generalized moments method (GMM), two-stage Arellano-Bond. The results show that liquidity management has the most positive effect on the profitability of banks, so that in private and semi-state banks, the intensity of this effect is greater than in state banks. https://jem.semnan.ac.ir/article_7456_7dd11ae2d5ed34925bdbdc9b01866349.pdf