Measuring the relationship of Basel III liquidity coverage ratio on return on equity and return on assets in US commercial "banks JPMorgan Bank Case Study"

Abstract

The main objective of Basel III decisions is to achieve fundamental reforms that enhance liquidity in order to make the banking sector more resilient. By improving its ability to absorb financial and economic shocks and reduce their transmission from the financial sector to the real economy. Perhaps the impact of the mortgage crisis (2007-2008) on economic indicators, including the Dow Jones index. In 2008, the index lost 32% of its points to settle at 8,840 points, after it was 13,000 points, which was described as worse than the Great Depression of 1929, which made the Basel III Committee make adjustments Therefore, the research dealt with the importance of applying the liquidity coverage ratio that enables the bank to ensure that it has sufficient liquidity to meet its needs within a period of 30 days, and the importance of profitability indicators, return on equity and return on assets, and the relationship between them. The research aims to define the importance of Working with the Basel decisions, which prevent banks from financial shocks, and one of the most important results of the research is that the liquidity coverage ratio is linked to a low positive relationship, that is, it does not constitute a burden on banks, and profits can be made from them by retaining liquid funds allocated to cover liquidity in the form of highly liquid assets such as investing in short securities. term that enhances banking confidence