Standing lending facility in interbank market: Evidence from China

We observe an anomaly that SLF quantity expansion is often accompanied by higher interbank market rates. With the Shibor bid panel, this paper empirically shows that SLF easing encourages bank risk-taking activity, and amplifies bank liquidity demand. The induced demand dominates the liquidity suppl...

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Detalles Bibliográficos
Autores principales: Guo, Tiantao, Wang, Yan, Zhang, Wanzhu
Formato: Online Artículo Texto
Lenguaje:English
Publicado: Public Library of Science 2023
Materias:
Research Article
Acceso en línea:https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10218752/
https://www.ncbi.nlm.nih.gov/pubmed/37235624
http://dx.doi.org/10.1371/journal.pone.0284470
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author Guo, Tiantao
Wang, Yan
Zhang, Wanzhu
author_facet Guo, Tiantao
Wang, Yan
Zhang, Wanzhu
author_sort Guo, Tiantao
collection PubMed
description We observe an anomaly that SLF quantity expansion is often accompanied by higher interbank market rates. With the Shibor bid panel, this paper empirically shows that SLF easing encourages bank risk-taking activity, and amplifies bank liquidity demand. The induced demand dominates the liquidity supply effect and leads to higher interbank rates. Moreover, the risk-taking behavior of state-owned banks is more sensitive to SLF than that of non-state-owned banks. These features make SLF a better expectation management tool than a price-based or quantity-based tool for interbank market liquidity management.
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spelling pubmed-102187522023-05-27 Standing lending facility in interbank market: Evidence from China Guo, Tiantao Wang, Yan Zhang, Wanzhu PLoS One Research Article We observe an anomaly that SLF quantity expansion is often accompanied by higher interbank market rates. With the Shibor bid panel, this paper empirically shows that SLF easing encourages bank risk-taking activity, and amplifies bank liquidity demand. The induced demand dominates the liquidity supply effect and leads to higher interbank rates. Moreover, the risk-taking behavior of state-owned banks is more sensitive to SLF than that of non-state-owned banks. These features make SLF a better expectation management tool than a price-based or quantity-based tool for interbank market liquidity management. Public Library of Science 2023-05-26 /pmc/articles/PMC10218752/ /pubmed/37235624 http://dx.doi.org/10.1371/journal.pone.0284470 Text en © 2023 Guo et al https://creativecommons.org/licenses/by/4.0/This is an open access article distributed under the terms of the Creative Commons Attribution License (https://creativecommons.org/licenses/by/4.0/) , which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.
spellingShingle Research Article
Guo, Tiantao
Wang, Yan
Zhang, Wanzhu
Standing lending facility in interbank market: Evidence from China
title Standing lending facility in interbank market: Evidence from China
title_full Standing lending facility in interbank market: Evidence from China
title_fullStr Standing lending facility in interbank market: Evidence from China
title_full_unstemmed Standing lending facility in interbank market: Evidence from China
title_short Standing lending facility in interbank market: Evidence from China
title_sort standing lending facility in interbank market: evidence from china
topic Research Article
url https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10218752/
https://www.ncbi.nlm.nih.gov/pubmed/37235624
http://dx.doi.org/10.1371/journal.pone.0284470
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AT wangyan standinglendingfacilityininterbankmarketevidencefromchina
AT zhangwanzhu standinglendingfacilityininterbankmarketevidencefromchina

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