Banks’ Liquidity Buffers and the Role of Liquidity Regulation

Clemens Bonner, Iman Lelyveld and Robert Zymek

Journal of Financial Services Research, 2015, vol. 48, issue 3, 215-234

Abstract: We assess the determinants of banks’ liquidity holdings using data for nearly 7000 banks from 25 OECD countries. We highlight the role of several bank-specific, institutional and policy variables in shaping banks’ liquidity risk management. Our main question is whether liquidity regulation neutralizes banks’ incentives to hold liquid assets. Without liquidity regulation, the determinants of banks’ liquidity buffers are a combination of bank-specific and country-specific variables. While most incentives are neutralized by liquidity regulation, a bank’s disclosure requirements remain important. The complementarity of disclosure and liquidity requirements provides a strong rationale for considering them jointly in the design of regulation. Copyright Springer Science+Business Media New York 2015

Keywords: Liquidity; Financial regulation; Disclosure; Banks; G20; G21; G28 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (15)

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DOI: 10.1007/s10693-014-0207-5

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