Bank funding structures and risk : evidence from the global financial crisis /
This paper analyzes the evolution of bank funding structures in the run up to the global financial crisis and studies the implications for financial stability, exploiting a bank-level dataset that covers about 11,000 banks in the U.S. and Europe during 2001-09. The results show that banks with weake...
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| Main Authors: | , |
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| Format: | Electronic eBook |
| Language: | English |
| Published: |
[Washington, D.C.] :
International Monetary Fund,
©2012.
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| Series: | IMF working paper ;
WP/12/29. |
| Subjects: | |
| Online Access: |
Full text (Emmanuel users only) |
| Summary: | This paper analyzes the evolution of bank funding structures in the run up to the global financial crisis and studies the implications for financial stability, exploiting a bank-level dataset that covers about 11,000 banks in the U.S. and Europe during 2001-09. The results show that banks with weaker structural liquidity and higher leverage in the pre-crisis period were more likely to fail afterward. The likelihood of bank failure also increases with bank risk-taking. In the cross-section, the smaller domestically-oriented banks were relatively more vulnerable to liquidity risk, while the large cross-border banks were more susceptible to solvency risk due to excessive leverage. The results support the proposed Basel III regulations on structural liquidity and leverage, but suggest that emphasis should be placed on the latter, particularly for the systemically-important institutions. Macroeconomic and monetary conditions are also shown to be related with the likelihood of bank failure, providing a case for the introduction of a macro-prudential approach to banking regulation. |
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| Item Description: | At head of title: European Department. Title from PDF title page (IMF Web site, viewed January 25, 2012). "January 2012." |
| Physical Description: | 1 online resource (32 pages) : color charts |
| Bibliography: | Includes bibliographical references (pages 18-19). |
| ISBN: | 9781463940997 1463940998 9781463949525 1463949529 |