Download or read book Bank Liquidity Hoarding and the Financial Crisis written by Jose M. Berrospide and published by . This book was released on 2013 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Bank Liquidity Hording and Financial Crisis written by Federal Reserve Federal Reserve Board and published by CreateSpace. This book was released on 2014-11-14 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Federal Reserve Board tested and found supporting evidence for the precautionary motive hypothesis of liquidity hoarding for U.S. commercial banks during the recent financial crisis. They also found that banks held more liquid assets in anticipation of future losses from securities write-downs. Exposure to securities losses in their investment portfolios and expected loan losses (measured by loan loss reserves) represent key measures of banks' on-balance sheet risks, in addition to off-balance sheet liquidity risk stemming from unused loan commitments. Furthermore, unrealized securities losses and loan loss reserves seem to better capture the risks stemming from banks' asset management and provide supporting evidence for the precautionary nature of liquidity hoarding. Moreover, also found that more than one-fourth of the reduction in bank lending during the crisis is due to the precautionary motive.

Download or read book Domino Effects When Banks Hoard Liquidity written by Valère Fourel and published by . This book was released on 2013 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: We investigate the consequences of banks' liquidity hoarding behavior for the stability of the financial system proposing a new model of banking contagion through two channels, bilateral exposures and funding shortage. Inspired by the key role of liquidity hoarding in the 2007-2009 financial crisis, we incorporate banks' hoarding behavior in a standard Iterative Default Cascade algorithm to compute the propagation of a common market shock through a banking system. In addition to potential solvency contagion, a market shock leads to banks' liquidity hoarding that may generate problems of short-term funding for other banks. As an empirical exercise, we apply this model to the French banking system. Relying on data on bank's bilateral exposures collected by the French Prudential Supervisor Authority, the French banking sector appears resilient to the combination of an initial market shock (losses on marked-to-market assets) and of the resulting solvency and liquidity contagion. Gauging the relative weights in the total loss of the various factors, the model sheds light on the complexity of liquidity hoarding effects.

Download or read book Liquidity and Crises written by Franklin Allen and published by OUP USA. This book was released on 2011-01-13 with total page 718 pages. Available in PDF, EPUB and Kindle. Book excerpt: One important cause of the 2007-2009 crisis was illiquidity combined with exposure of many financial institutions to liquidity needs. But what is liquidity and why is it so important for financial institutions to command enough liquidity? This book brings together classic articles and recent contributions to this important field.

Download or read book Stressed Not Frozen written by Gara Afonso and published by DIANE Publishing. This book was released on 2011 with total page 61 pages. Available in PDF, EPUB and Kindle. Book excerpt: This is a print on demand edition of a hard to find publication. Examines the impact of the financial crisis of 2008, specifically the bankruptcy of Lehman Brothers, on the federal funds market. Rather than a complete collapse of lending in the presence of a market-wide shock, banks became more restrictive in their choice of counter-parties. Following the Lehman bankruptcy, amounts and spreads became more sensitive to a borrowing bank¿s characteristics. While the market did not contract dramatically, lending rates increased. Further, the market did not seem to expand to meet the increased demand predicted by the drop in other bank funding markets. The authors examine discount window borrowing as a proxy for unmet fed funds demand and find that the fed funds market is not indiscriminate. Illustrations.

Download or read book Central Bank Refinancing Interbank Markets and the Hypothesis of Liquidity Hoarding written by Massimiliano Affinito and published by . This book was released on 2015 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: This is the first paper to analyse the relationship between single banks' positions vis-à-vis the central bank and the interbank market and to perform an extensive test of the liquidity hoarding hypothesis using micro data. According to the most critical version of the hypothesis, during the crisis, central banks have been ineffective because banks hoarded the liquidity injected rather than channelling it on to other banks and the real economy. The results show that in Italy during the 2007-2011 financial crisis, contrary to widespread conjecture, the liquidity injected by the Eurosystem was intermediated among banks and towards the economy.

Download or read book Bank Liquidity and the Global Financial Crisis written by Laura Chiaramonte and published by Springer. This book was released on 2018-07-09 with total page 213 pages. Available in PDF, EPUB and Kindle. Book excerpt: One of the lessons learned from the Global Financial Crisis of 2007–9 is that minimum capital requirements are a necessary but inadequate safeguard for the stability of an intermediary. Despite the high levels of capitalization of many banks before the crisis, they too experienced serious difficulties due to insufficient liquidity buffers. Thus, for the first time, after the GFC regulators realized that liquidity risk can jeopardize the orderly functioning of a bank and, in some cases, its survival. Previously, the risk did not receive the same attention by regulators at the international level as other types of risk including credit, market, and operational risks. The GFC promoted liquidity risk to a significant place in regulatory reform, introducing uniform international rules and best practices. The literature has studied the potential effects of the new liquidity rules on the behaviour of banks, the financial system, and the economy as a whole. This book provides a comprehensive understanding of the bank liquidity crisis that occurred during the GFC, of the liquidity regulatory reform introduced by the Basel Committee with the Basel III Accord, and its implications both at the micro and macroeconomic levels. Università Cattolica del Sacro Cuore contributed to the funding of this research project and its publication.

Download or read book Bank Accounting Ratios Interbank Lending and Liquidity Hoarding During Financial Crisis 2007 8 written by Xinyi Huang and published by . This book was released on 2017 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Bank Accounting Ratios Interbank Lending and Liquidity Hoarding During Financial Crisis 2007 08 written by Xinyi Huang and published by . This book was released on 2018 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Bank Liquidity Creation and Financial Crises written by Allen N. Berger and published by Academic Press. This book was released on 2015-11-24 with total page 296 pages. Available in PDF, EPUB and Kindle. Book excerpt: Bank Liquidity Creation and Financial Crises delivers a consistent, logical presentation of bank liquidity creation and addresses questions of research and policy interest that can be easily understood by readers with no advanced or specialized industry knowledge. Authors Allen Berger and Christa Bouwman examine ways to measure bank liquidity creation, how much liquidity banks create in different countries, the effects of monetary policy (including interest rate policy, lender of last resort, and quantitative easing), the effects of capital, the effects of regulatory interventions, the effects of bailouts, and much more. They also analyze bank liquidity creation in the US over the past three decades during both normal times and financial crises. Narrowing the gap between the "academic world" (focused on theories) and the "practitioner world" (dedicated to solving real-world problems), this book is a helpful new tool for evaluating a bank’s performance over time and comparing it to its peer group. Explains that bank liquidity creation is a more comprehensive measure of a bank’s output than traditional measures and can also be used to measure bank liquidity Describes how high levels of bank liquidity creation may cause or predict future financial crises Addresses questions of research and policy interest related to bank liquidity creation around the world and provides links to websites with data and other materials to address these questions Includes such hot-button topics as the effects of monetary policy (including interest rate policy, lender of last resort, and quantitative easing), the effects of capital, the effects of regulatory interventions, and the effects of bailouts

Download or read book Stressed Not Frozen written by Gara Afonso and published by . This book was released on 2010 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Abstract: This paper examines the impact of the financial crisis of 2008 on the federal funds market, specifically the bankruptcy of Lehman Brothers. Rather than a complete collapse of lending in the presence of a market wide shock, we see that banks become more restrictive in which counterparties they lend to. After Lehman Brothers, we find that amounts and spreads become more sensitive to borrower bank characteristics. While the market does not contract dramatically, lending rates increase. Further, the market does not seem to expand to meet the increased demand predicted by the drop in other bank funding markets. We examine discount window borrowing as a proxy for unmet fed funds demand and find that the fed funds market is not indiscriminate. As expected, borrowers who access the discount window have lower ROA. When looking at the lender side we do not find that the characteristics of the lending bank importantly affect the amount of interbank loans a bank makes. In particular, we do not find that worse performing banks start hoarding liquidity and indiscriminately reduce their lending

Download or read book International Liquidity and the Financial Crisis written by Bill Allen and published by Cambridge University Press. This book was released on 2013-01-03 with total page 271 pages. Available in PDF, EPUB and Kindle. Book excerpt: Explains how the financial crisis spread across the world, how damage was contained and how the monetary world has changed.

Download or read book Beyond Liquidity written by Brad Pasanek and published by Routledge. This book was released on 2013-08-21 with total page 145 pages. Available in PDF, EPUB and Kindle. Book excerpt: ‘Liquidity’, or rather lack of it, lies at the heart of the ongoing global financial crisis. In this collection of essays, the metaphor of money as liquidity, and the model of crisis it entails, is deliberated by a range of scholars from economics, history, anthropology, literature, and sociology. This volume offers a rhetorical explanation of the social, cultural, and historical contexts in which metaphors of money are produced, circulate, and fail. These essays, first presented at "After the Crash, Beyond Liquidity," a conference on money and metaphors held at the University of Virginia, USA, in October of 2009, were drafted in the wake of global uncertainty, TARP bailouts, the Great Recession, programs of stimulus and austerity, and recurrent threats of sovereign default in the EU. They question the language of liquidity and flows that is characteristic of everyday business, exposing what metaphors of money hide and explaining why the idea of liquidity has proved so durable. This book was originally published as a special issue of the Journal of Cultural Economy.

Download or read book Liquidity Hoarding and Interbank Market Spreads written by Florian Heider and published by . This book was released on 2016 with total page 53 pages. Available in PDF, EPUB and Kindle. Book excerpt: We develop a model of interbank lending and borrowing with counterparty risk. The model has two key ingredients. First, liquidity in the banking sector is endogenous, which means that there is an opportunity cost of holding liquid assets. Second, banks are privately informed about the risk of their long-term assets, which can lead to adverse selection and high interest rates in the interbank market. We identify a novel form of a market break-down, which can lead to liquidity hoarding. It arises because adverse selection in the interbank market changes the opportunity cost of holding liquidity. We use the model to shed light on developments in interbank markets prior to and during the 2007-09 financial crisis, as well as the effectiveness of policy interventions aimed at restoring interbank market activity.

Download or read book Precautionary Reserves and the Interbank Market written by Adam Ashcraft and published by . This book was released on 2009 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Policy Uncertainty and Bank Liquidity Hoarding written by Badar Nadeem Ashraf and published by . This book was released on 2020 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt: Uncertainty about government economic policies (GEPU) leads economic agents to act cautiously. In this paper, we postulate that such GEPU leads banks to hoard higher amount of liquid assets as a precautionary motive. Using bank-level data from 21 countries over the period 1998-2018, we find that GEPU positively affects bank liquid assets holdings. While examining the channels, results of interaction-terms provide evidence that banks reduce lending and attract higher deposits to build up liquid assets in response to heightened GEPU. We further confirm precautionary motive by finding that the positive association between GEPU and bank liquid assets strengthens for banks with higher expected loan losses.

Download or read book Precautionary Hoarding of Liquidity and Inter bank Markets written by Viral V. Acharya and published by . This book was released on 2012 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study the liquidity demand of large settlement (first-tier) banks in the UK and its effect on the Sterling Money Markets before and during the sub-prime crisis of 2007-08. Liquidity holdings of large settlement banks experienced on average a 30% increase in the period immediately following 9th August, 2007, the day when money markets froze, igniting the crisis. In the UK, unlike in the US until October 2008, the remuneration of reserves accounts provides strong incentives for banks to park liquidity at the central bank rather than lend in the market. We show that following this structural break, settlement bank liquidity had a precautionary nature in that it rose on calendar days with a large amount of payment activity and for banks with greater credit risk. We establish that the liquidity demand by settlement banks caused overnight inter-bank rates to rise and volumes to decline, an effect virtually absent in the pre-crisis period. This liquidity effect on inter-bank rates occurred in both unsecured borrowing as well as borrowing secured by UK government bonds. Further, using bilateral data we show that the effect was more strongly linked to lender risk than to borrower risk.