Abstarct: Objective: Considering that liquidity is one of the key factors that can directly impact the financial performance of banks, proper liquidity management in unstable economic conditions and financial market fluctuations is a major concern for managers and economic policymakers. The present study seeks to examine the impact of liquidity indicators on the performance of banks listed in the Iranian capital market during the years 2013–2023. In this study, the Liquidity Coverage Ratio (LCR) and Loan-to-Deposit Ratio (LCRP) are considered as liquidity metrics, while Net Interest Margin (NIM), Return on Assets (ROA), and Non-Performing Assets (NPA) are taken as performance evaluation criteria for banks. Methodology: In this research, the necessary information to calculate the research variables was extracted from the banks' balance sheets. After extracting the data, the variables were calculated and normalized. Next, the stationarity of the variables was assessed using the Hardy test. Finally, for each of the dependent variables, a model was designed and executed using the Generalized Method of Moments (GMM) through the Eviews software. Findings: The results show that the Liquidity Coverage Ratio (LCR) has no significant relationship with Net Interest Margin (NIM) and Return on Assets (ROA), which are measures of bank profitability, but it has a negative and significant relationship with Non-Performing Assets (NPA). Similarly, the Loan-to-Deposit Ratio (LCRP) has no linear relationship with Net Interest Margin (NIM), but it has a negative and significant relationship with Return on Assets (ROA) and Non-Performing Assets (NPA). Conclusion: The lack of a relationship between the Liquidity Coverage Ratio (LCR) and both Net Interest Margin (NIM) and Return on Assets (ROA), as well as the absence of a significant relationship between the Loan-to-Deposit Ratio (LCRP) and Net Interest Margin (NIM), could be attributed to the method of profit recognition in the accounting system of banks and reflects the banking practices in Iran. The negative and significant relationship between the Loan-to-Deposit Ratio (LCRP) and Return on Assets (ROA) indicates that the Loan-to-Deposit Ratio (LCRP) positively correlates with bank profitability. Moreover, the U-shaped relationship between the bank's Net Interest Margin (NIM) and the square of the Loan-to-Deposit Ratio (LCR²) suggests an optimal level of liquidity. It demonstrates that holding liquidity above the optimal level increases the opportunity cost of holding cash and reduces bank profitability. Additionally, the negative and significant relationship between the Liquidity Coverage Ratio (LCR) and Non-Performing Assets (NPA) suggests that implementing liquidity regulations and increasing highly liquid assets compel banks to avoid high-risk lending to maintain and enhance liquidity levels, thereby reducing Non-Performing Assets (NPA). Conversely, the negative and significant relationship between the Loan-to-Deposit Ratio (LCRP) and Non-Performing Assets (NPA) could be due to increased bank flexibility from higher liquidity levels, which may increase moral hazard and high-risk lending, ultimately leading to higher levels of Non-Performing Assets (NPA).