Social capital and bank liquidity hoarding

Chen Zheng, Adrian Wai Kong Cheung and Tom Cronje

Journal of International Financial Markets, Institutions and Money, 2022, vol. 80, issue C

Abstract: This study examines whether and to what extent social capital affects bank liquidity hoarding. Using more than 96,000 bank-quarter observations for more than 3,900 U.S. commercial banks spanning the period from 2003 to 2014, we find strong evidence that banks headquartered in counties with high social capital exhibit low liquidity hoarding. Social capital moderates the relationship between liquidity risk and liquidity hoarding and that between credit risk and liquidity hoarding. Bank capital has a mediation effect on the association between social capital and liquidity hoarding. Thus, social capital serves as an informal monitoring mechanism and can reduce costly liquidity hoarding.

Keywords: Social capital; Bank liquidity hoarding; Bank capital; Liquidity risk; Credit risk (search for similar items in EconPapers)
JEL-codes: G21 G28 Z13 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:80:y:2022:i:c:s1042443122001251

DOI: 10.1016/j.intfin.2022.101653

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