This research examines the impact of Basel III liquidity requirements on the performance of publicly traded commercial banks in Indonesia throughout 2016–2022. It further scrutinizes the differential effects of these requirements on small and large banks. Using a sample set of 39 banks, the study reveals that enforcing the Liquidity Coverage Ratio (LCR) requirement imposes regulatory constraints, thereby diminishing banks’ profitability within the Indonesian market. Interestingly, the study uncovers that larger banks are less affected by implementing Basel III than their smaller counterparts. These findings offer crucial insights that could aid banks and regulatory bodies in tackling the challenges of liquidity regulations. This study underscores the importance of considering bank size when implementing regulatory changes, as the effects can vary significantly.

Link: The Impact of BASEL III Liquidity Requirements on Bank Performance: Lesson from Indonesia