Is there a Role for Funding in Explaining Recent U.S. Banks' Failures?

Pierluigi Bologna

No 2011/180, IMF Working Papers from International Monetary Fund

Abstract: This paper tests the role of different banks' liquidity funding structures in explaining the banks' failures, which occurred in the United States between 2007 and 2009. The results highlight that funding is indeed a significant factor in explaining banks' probability of default. By confirming the role of funding as the driver of banking crisis, the paper also recognizes that the new liquidity framework proposed by the Basel Committee on Banking Supervision appears to have the features to strenghten banks' liquidity conditions and improve financial stability. Its correct implementation together with closer supervision of banks' liquidity and funding conditions appear, however, the determinant for such improvements to be achieved.

Keywords: WP; bank; deposit; banks' default; Banks; Default; Crises; Liquidity; Funding; Brokered Desposits; Liquidity Regulation; Deposit Insurance; United States; bank si; liquidity condition; banks' status; funding mix; defaulted bank; management action; risk profile; asset size; macroeconomic variable; Nonperforming loans; Capital adequacy requirements; Distressed institutions; Global (search for similar items in EconPapers)
Pages: 28
Date: 2011-07-01
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Citations: View citations in EconPapers (17)

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Working Paper: Is there a role for funding in explaining recent US bank failures? (2011)
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