The repercussions of fluctuations in the exchange rate of the Libyan dinar (official and parallel) against the dollar on the liquidity crisis and the quality of credit servicesA field study of the opinions of employees of commercial banks in the city of Sirte

Abstract

This study aimed to measure the repercussions of the Libyan Dinar exchange rate fluctuations (both official and parallel) against the US Dollar on the cash liquidity crisis and the quality of credit services in commercial banks in Sirte. To achieve the study’s objectives, the researcher adopted the descriptive-analytical approach. A questionnaire was used as the primary tool for data collection, distributed to a proportional stratified random sample of (130) employees working in five public commercial banks in the city.

The statistical analysis using (SPSS) revealed a strong, statistically significant impact of exchange rate fluctuations on exacerbating the liquidity crisis in Sirte's banks (explaining 61% of the variance). The findings also proved a significant impact of these fluctuations on the quality of credit services, including both letters of credit and loans, with an impact rate of (52.7%). The study concluded that the parallel market now dominates commercial activity in the city, prompting major merchants to hoard cash and bypass official banking channels. Additionally, current credit ceilings for loans have become inadequate amidst inflation and the depreciation of the Dinar.

The study recommended the necessity of unifying monetary policy, periodically reviewing loan ceilings to match the real value of the Dinar, and accelerating the shift towards electronic banking services to alleviate the growing pressure on cash withdrawals.