The impact of liquidity regulation on banks

Ryan Banerjee and Hitoshi Mio

Journal of Financial Intermediation, 2018, vol. 35, issue PB, 30-44

Abstract: We estimate the causal effect of liquidity regulation on bank balance sheets. We take advantage of the heterogeneous implementation of tighter liquidity regulation by the UK Financial Services Authority in 2010. We find that banks adjusted the composition of both assets and liabilities, increasing the share of high quality liquid assets and non-financial deposits while reducing intra-financial loans and short-term wholesale funding. We do not find evidence that the tightening of liquidity regulation caused banks to shrink their balance sheets, nor reduce the amount of lending to the non-financial sector.

Keywords: Banking; Regulation; Liquidity; Financial Intermediation (search for similar items in EconPapers)
JEL-codes: E32 E51 F30 G21 G28 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (62)

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Related works:
Working Paper: The impact of liquidity regulation on banks (2015)
Working Paper: The Impact of Liquidity Regulation on Banks (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinin:v:35:y:2018:i:pb:p:30-44

DOI: 10.1016/j.jfi.2017.05.008

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