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The determinants of excess reserves in the banking system of Papua New Guinea

Crawford School of Public Policy
Photo by Wikiedit.ray on Wikimedia Commons

Event details

PhD Seminar (Econ)

Date & time

Friday 08 October 2021
11.00am–12.00pm

Venue

Online via Zoom

Speaker

Thomas Wangi

This study examines why profit-maximizing commercial banks in Papua New Guinea hold non-remunerated excess reserves. An ARDL model is employed to estimate the demand for excess reserves using time series data for the period January 2002 to December 2017. The model includes precautionary and involuntary factors that influence excess reserves in commercial banks. The empirical results are analyzed for both long-run and short-run situations. The results suggest that involuntary variables are the leading determinants of excess reserves in the banking system. For sensitivity purposes, the estimation results of the DOSL method confirm the long-run results of the main model.

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