Wholesale funding and liquidity creation

We examine the relationship between wholesale funding and liquidity creation using a sample of 825 banks in 84 countries during the post-crisis period of 2010–2020. We find that asset-side liquidity creation is consistently negatively associated with short-term wholesale funding, but not with long-t...

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Detalles Bibliográficos
Autores principales: Kladakis, George, Chen, Lei, Bellos, Sotirios K.
Formato: Online Artículo Texto
Lenguaje:English
Publicado: Springer US 2022
Materias:
Original Research
Acceso en línea:https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9255446/
http://dx.doi.org/10.1007/s11156-022-01081-9
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author Kladakis, George
Chen, Lei
Bellos, Sotirios K.
author_facet Kladakis, George
Chen, Lei
Bellos, Sotirios K.
author_sort Kladakis, George
collection PubMed
description We examine the relationship between wholesale funding and liquidity creation using a sample of 825 banks in 84 countries during the post-crisis period of 2010–2020. We find that asset-side liquidity creation is consistently negatively associated with short-term wholesale funding, but not with long-term wholesale funding. Our results suggest that the relationship of short-term wholesale funding with asset-side liquidity creation is significantly driven by a negative relationship with illiquid lending. Moreover, our results show that the negative relationship between wholesale funding and liquidity creation is positively moderated by asset risk, suggesting the presence of moral hazard incentives. Our results are robust to a series of tests and have important implications for bank liquidity regulation.
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spelling pubmed-92554462022-07-06 Wholesale funding and liquidity creation Kladakis, George Chen, Lei Bellos, Sotirios K. Rev Quant Finan Acc Original Research We examine the relationship between wholesale funding and liquidity creation using a sample of 825 banks in 84 countries during the post-crisis period of 2010–2020. We find that asset-side liquidity creation is consistently negatively associated with short-term wholesale funding, but not with long-term wholesale funding. Our results suggest that the relationship of short-term wholesale funding with asset-side liquidity creation is significantly driven by a negative relationship with illiquid lending. Moreover, our results show that the negative relationship between wholesale funding and liquidity creation is positively moderated by asset risk, suggesting the presence of moral hazard incentives. Our results are robust to a series of tests and have important implications for bank liquidity regulation. Springer US 2022-07-05 2022 /pmc/articles/PMC9255446/ http://dx.doi.org/10.1007/s11156-022-01081-9 Text en © The Author(s) 2022 https://creativecommons.org/licenses/by/4.0/Open AccessThis article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article’s Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article’s Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit http://creativecommons.org/licenses/by/4.0/ (https://creativecommons.org/licenses/by/4.0/) .
spellingShingle Original Research
Kladakis, George
Chen, Lei
Bellos, Sotirios K.
Wholesale funding and liquidity creation
title Wholesale funding and liquidity creation
title_full Wholesale funding and liquidity creation
title_fullStr Wholesale funding and liquidity creation
title_full_unstemmed Wholesale funding and liquidity creation
title_short Wholesale funding and liquidity creation
title_sort wholesale funding and liquidity creation
topic Original Research
url https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9255446/
http://dx.doi.org/10.1007/s11156-022-01081-9
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