Testing the Non-Linear Relationship between Liquidity Risk and Bank Stability in the MENA Region

This paper aims to investigate whether the relationship between liquidity risk and bank stability is non-linear. It uses a sample of 83 MENA banks from 2005 2020. Due several economic, financial, regulation differences, whole was divided into two sub-samples. The first one related Middle East countries covers 56 while second North African 27 banks. We performed Panel Smooth Threshold Regression (PSTR) model proposed by González et al. (2005) as an empirical approach. results indicate that exists threshold effect in risk-bank relationship. More specifically, we found below certain threshold, loan to-deposit-ratio does not exert any significant on East; it significantly increases countries. Above, same loan-to-deposit ratio decreases for