In our next analysis, we assess how the interrelationshipsamong liquidity creation, regulatory capital, and bank profitabilityvary across sub-periods that can be characterized as normal, marketcrises, or banking crises. Beginning with the relationship betweenliquidity creation and capital, Panels A and B in Table 6report that the positive bidirectional relationship holds only duringnormal periods. We find that the relationship disappears duringmarket and banking crises. One possible explanation for thedisappearing linkage over crisis periods is that banks tend to reducelending activities and lower liquidity creation. At the sametime, banks are likely to experience losses and may attempt or beforced to sell assets to improve capital ratios. The interactions betweenliquidity creation and capital therefore weaken during crisisperiods relative to normal periods. In addition, Panel C shows thatthe negative effects of liquidity creation and capital on bank performanceare present during normal and banking crisis periods. Theseresults emphasize that the interrelationships are sensitive to subperiodsand are more robust in normal periods.