Stress relief? Funding structures and resilience to the covid shock

Kristin Forbes, Christian Friedrich and Dennis Reinhardt

Journal of Monetary Economics, 2023, vol. 137, issue C, 47-81

Abstract: How did funding structures—the source, instrument, currency, and counterparty location of financing—relate to the financial stress experienced in different countries and sectors during Covid-19? Banks and corporates with a higher share of funding from non-bank financial institutions (NBFIs) or in US dollars experienced significantly greater stress, while more funding in debt instruments (versus loans) or cross-border (versus domestically) did not affect resilience. Policies targeting these structural vulnerabilities (US$ swap lines and NBFI policies) were more effective at mitigating stress than policies supporting banks, even controlling for macroeconomic policies. Macroprudential regulations should prioritize exposures to NBFI and dollar funding.

Keywords: Covid-19; Financial stress; Funding structure; Non-bank financial institutions; Shadow banks (search for similar items in EconPapers)
JEL-codes: E44 E65 F31 F36 F42 G18 G23 G38 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Stress Relief? Funding Structures and Resilience to the Covid Shock (2023)
Working Paper: Stress Relief? Funding Structures and Resilience to the Covid Shock (2023)
Working Paper: Stress Relief?: Funding Structures and Resilience to the Covid Shock (2023)
Working Paper: Stress relief? Funding structures and resilience to the Covid Shock (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:137:y:2023:i:c:p:47-81

DOI: 10.1016/j.jmoneco.2023.05.005

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