Non-Core Bank Liabilities and Financial Vulnerability

Joon-Ho Hahm, Hyun Song Shin and Kwanho Shin

No 18428, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: A lending boom is reflected in the composition of bank liabilities when traditional retail deposits (core liabilities) cannot keep pace with asset growth and banks turn to other funding sources (non-core liabilities) to finance their lending. We formulate a model of credit supply as the flip side of a credit risk model where a large stock of non-core liabilities serves as an indicator of the erosion of risk premiums and hence of vulnerability to a crisis. We find supporting empirical evidence in a panel probit study of emerging and developing economies.

JEL-codes: F32 F33 F34 (search for similar items in EconPapers)
Date: 2012-09
New Economics Papers: this item is included in nep-ban, nep-cba and nep-fdg
Note: CF IFM
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Citations: View citations in EconPapers (27)

Published as JoonâHo Hahm & Hyun Song Shin & Kwanho Shin, 2013. "Noncore Bank Liabilities and Financial Vulnerability," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 45, pages 3-36, 08.

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Journal Article: Noncore Bank Liabilities and Financial Vulnerability (2013)
Journal Article: Noncore Bank Liabilities and Financial Vulnerability (2013)
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