Liquidity levels in commercial banks decreased in January 2018 to K5.89 billion per day from K6.43 billion in December 2017, according to figures compiled by Nico Asset Managers.
This means that, in the month under review, some commercial banks might have struggled with funds to lend out to customers.
And market analysts feel a continued drop in liquidity levels in the near future would pose a threat to interest rates.
A report from Nico Asset Managers shows that interbank borrowing, which is borrowing between commercial banks, averaged K9.24 billion per day in January 2018 at an average rate of 14.95 percent.
This is a slight drop from K9.83 billion per day in December 2017 at an average rate of 15.89 percent.
At the same time, the Lombard Facility (discount window borrowing) averaged K4.11 billion per day at an average of 18.00 percent, decreasing from K5.51 billion per day at an average rate of 19.58 percent.
In its 2017 Financial Stability Report, regulator, Reserve Bank of Malawi RBM, indicated that results of the liquidity stress testing exercise it conducted indicated that the industry would be resilient to a liquidity shock.
This is evidenced by industry liquidity ratios at 50.7 percent and 53.7 percent after a major liquidity shock, for both system wide and bank specific basis, was applied.
These were above the regulatory benchmark of 30 percent.
Some years ago, RBM introduced new liquidity measures, including a facility for cash-strapped banks, and changed the composition of the Liquidity Reserve Ratio to contain eminent risks to inflation.