Mandatory Capital Reserve Requirements and Financial Stability of Tuition-Dependent Higher Education Institutions: Evidence From Emerging Markets

This study develops and empirically tests a mandatory capital reserve deposit model as a financial sustainability instrument for tuition-dependent higher education institutions (HEIs) in emerging markets. While developed systems rely on large-scale endowment mechanisms (e.g., Harvard University), emerging private universities typically operate without structured liquidity buffers. Using panel data simulation (N = 120 private HEIs, 2018–2024), fixed-effects and random-effects regression models, and stress-testing scenarios, this study estimates the impact of a USD 350,000 reserve deposit requirement on liquidity risk, payroll continuity, and institutional survival probability.