Casey Barnett

This study examines the important but underexplored link between liquidity levels and profitability in commercial banks in Cambodia, a topic of great relevance for both bank managers and policymakers seeking to bolster financial stability. By analyzing data spanning 12 years (2011 to 2022) from 22 banks, the study applies a variety of panel data models, such as pooled ordinary least squares (OLS), fixed effects (FE), random effects (RE), and the one-step generalized method of moments (GMM). The findings reveal a statistically significant negative impact of liquidity on profitability across all static panel data models, with coefficients of –1.3005 (pooled OLS), –0.9786 (FE), and –0.9966 (RE), each statistically significant at varying levels. The dynamic panel data model (one-step GMM) further confirmed this negative relationship, showing a coefficient of –0.3588. It also highlighted a robust positive effect of lagged profitability, with a coefficient of 0.7491. Interestingly, the study found that only bank-specific factors, such as operating expenses and net interest margin, consistently influenced profitability across both static and dynamic panel models. On the other hand, macroeconomic factors like inflation were shown to negatively affect profitability, underscoring the need for sound bank management practices and well-designed regulatory policies.

Acknowledgments
We sincerely appreciate the financial support from the management of CamEd Business School, which made it possible for us to submit this paper for publication.

Type of the article: Research Article

Abstract
In Cambodia’s emerging economy, characterized by a large informal sector and tax compliance challenges, a successful tax amnesty program could strengthen financial markets by enhancing transparency and boosting investor confidence. The purpose of this study is to investigate how tax amnesty programs can improve investor confidence, regulatory trust, and access to finance, thereby promoting capital market participation. Using a quantitative approach, the study employs Partial Least Squares Structural Equation Modelling (PLS-SEM) to analyze data from 224 businesses. The findings reveal that participation in the tax amnesty program leads to significant improvements in financial transparency, investor confidence, regulatory trust, and access to finance. Moreover, increased investor confidence, desire to access finance, and regulatory trust were found to significantly influence companies’ intentions to list on the stock market. The study highlights the critical role of tax amnesty in preparing businesses for stock market listings and supporting capital market development, providing valuable insights for policymakers seeking to attract investment through regulatory reforms. The study contributes to the expanding literature on the importance of tax compliance and market development, offering insights into how tax forgiveness can act as a catalyst for economic growth and enhance capital market development.

Acknowledgment
This research was supported by the CamEd Business School research grant.