Purpose: This study aims to explore the causal relationship between liquidity and profitability over both short- and long-term periods for Syrian banks listed on the Damascus Securities Market.

Design/Methodology/Approach: Utilizing a quantitative analytical framework with a deductive approach, the research applies a vector error correction model (VECM) to analyze annual data from 11 Syrian banks during the period from 2013 to 2021.

Findings: The findings reveal that although the time series data for liquidity and profitability are nonstationary at their initial levels, they become stationary following the first differencing. The analysis confirms a long-term co-integrating relationship between the two variables, indicating that profitability significantly and positively influences liquidity in the long run. Conversely, liquidity does not show a significant effect on profitability. In the short term, there is no statistically observable causal relationship in either direction.

Recommendation: the study recommends that Syrian bank managers should reinvest profits strategically to develop liquidity buffers. Additionally, policymakers are advised to incorporate considerations of long-term profitability in the regulations concerning liquidity and capital adequacy.

Index terms: profitability, Liquidity, return on assets, Current ratio, Vector Error Correction Model.