Bank funding costs during the COVID-19 pandemic: Evidence from China

Haoyu Gao, Jinxuan Li and Huiyu Wen

Pacific-Basin Finance Journal, 2023, vol. 79, issue C

Abstract: This paper investigates whether and how the COVID-19 pandemic affects bank funding costs in China. We find a significantly positive relationship between the offering yield spreads of negotiable certificates of deposit and banks' pandemic exposure. The surge in bank funding costs is alleviated by banks' asset quality, financial flexibility, operational resilience, and government support, indicating that pandemic-induced risks are priced in the interbank market. The alternative explanations of monetary policy interventions, investors' flight-to-liquidity effect, bank liquidity hoarding, and banks' mispricing are further excluded. We contribute to the literature on the pandemic effects on financial markets, and bank funding during crises.

Keywords: Bank funding costs; Negotiable certificates of deposit; COVID-19 pandemic; Bank risk (search for similar items in EconPapers)
JEL-codes: G12 G21 I18 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0927538X23000720
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:79:y:2023:i:c:s0927538x23000720

DOI: 10.1016/j.pacfin.2023.102006

Access Statistics for this article

Pacific-Basin Finance Journal is currently edited by K. Chan and S. Ghon Rhee

More articles in Pacific-Basin Finance Journal from Elsevier
Bibliographic data for series maintained by Catherine Liu ().