Wholesale Bank Funding, Capital Requirements and Credit Rationing

Author/Editor:

Itai Agur

Publication Date:

January 31, 2013

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper analyzes how different types of bank funding affect the extent to which banks ration credit to borrowers, and the impact that capital requirements have on that rationing. Using an extension of the standard Stiglitz-Weiss model of credit rationing, unsecured wholesale finance is shown to amplify the credit market impact of capital requirements as compared to funding by retail depositors. Unsecured finance surged in the pre-crisis years, but is increasingly replaced by secured funding. The collateralization of wholesale funding is found to expand the extent of credit rationing.

Series:

Working Paper No. 13/30

Subject:

English

Publication Date:

January 31, 2013

ISBN/ISSN:

9781475571622/1018-5941

Stock No:

WPIEA2013030

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

22

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