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The impact of liquidity regulation on banks

Ryan Banerjee and Hitoshi Mio ()
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Hitoshi Mio: Bank of Japan

No 536, Bank of England working papers from Bank of England

Abstract: We present the first study to estimate the causal effect of liquidity regulation on bank balance sheets. It takes 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: - (search for similar items in EconPapers)
JEL-codes: E32 E51 F30 G21 G28 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2015-07-24
New Economics Papers: this item is included in nep-ban, nep-cba and nep-mac
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Related works:
Journal Article: The impact of liquidity regulation on banks (2018) Downloads
Working Paper: The Impact of Liquidity Regulation on Banks (2014) Downloads
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