The impact of the new structural liquidity rules on the profitability of EU banks.

Based on a sample of the largest European banks, this chapter aims to contribute to the current debate on the implications of the new structural liquidity ratio of Basel III, the Net Stable Funding Ratio (NSFR), on banks’ profitability. The results of the empirical analysis indicate that the NSFR is a significant determinant of banks’ performance and it is positively related to ROA and ROE. Hence, banks' compliance with the NSFR threshold does not appear to put banks’ profitability under pressure.