Liquidity, Exchange Rates Issues, and Challenges Affecting the Future of Yemeni Banks: A Quantitative Analysis
Yemen's prolonged conflict has triggered widespread disruptions in the banking sector, primarily through liquidity shortages and exchange rate instability. These challenges have contributed to operational inefficiencies and heightened financial instability. This study examines the effects of liquidity constraints and currency volatility on the financial performance and systemic stability of Yemeni banks. Data were collected through a structured cross-sectional survey administered to professionals in ten Yemeni commercial banks, with 69 valid responses analyzed.
The study employs descriptive statistics, correlation analysis, and multiple regression modeling to investigate the relationships between liquidity issues, exchange rate fluctuations, and key banking functions. Results indicate that both liquidity shortages and exchange rate volatility significantly impair banking operations, weaken solvency, and increase exposure to systemic risks. However, the complexity of monetary policy and institutional fragmentation further undermines resilience.
The study underscores the importance of targeted financial reforms and enhanced regulatory capacity. While the findings provide context-specific insights into Yemen’s fragile banking environment, further research using broader macroeconomic data is recommended to support generalization and long-term policy development.
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