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Present study seeks to contribute to the existing body of knowledge on bank liquidity creation in SAARC countries by utilizing the data from 2010-2020 through multivariate panel regression analysis utilizing Generalized Method of Moments (GMM). We carried out an econometric analysis aimed at exploring the primary internal and external factors that impact the creation of bank liquidity and it consequences. Our findings indicate that bank capital, operational risk, credit risk, liquidity risk and bank size have a substantial impact on liquidity creation while the role of country governance does not seem to be significant. The observed outcomes of liquidity creation by banks are stability, performance and economic growth. The study emphasizes the significance of bank liquidity creation for economic development as well as the need for regulators to monitor and limit liquidity risk in order to assure banking profitability and stability.