Bank liquidity hoarding during the COVID-19 pandemic

Dung Tran, Dien Giau Bui, Cuong Nguyen and Huy Viet Hoang

Finance Research Letters, 2023, vol. 55, issue PB

Abstract: This paper examines the association between bank liquidity hoarding (BLH) and the COVID-19 pandemic. Using a sample of U.S. banks and applying fixed effect estimators, we reveal that banks rack up liquidity assets and liabilities when the pandemic escalates. Our finding holds with alternative BLH and COVID-19 proxies and is further validated by falsification tests. Additional analysis reveals that BLH improves bank stability by reducing earnings volatility, non-performing loans and the propensity to go bankrupt. This study supports the existing literature on BLH and economic adversities and expands our understanding of BLH during the COVID-19 pandemic.

Keywords: Bank liquidity hoarding; Bank stability; Liquidity creation; COVID-19 (search for similar items in EconPapers)
JEL-codes: D80 G21 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:55:y:2023:i:pb:s1544612323003938

DOI: 10.1016/j.frl.2023.104021

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