Is There a Role for Funding in Explaining Recent U.S. Banks’ Failures?

 
Author/Editor: Bologna, Pierluigi
 
Publication Date: July 01, 2011
 
Electronic Access: Free Full text (PDF file size is 1,026KB).
Use the free Adobe Acrobat Reader to view this PDF file

 
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 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.
 
Series: Working Paper No. 11/180
Subject(s): Banking crisis | Bank supervision | Basel Core Principles | Deposit insurance | Liquidity | United States

Author's Keyword(s): Banks | Default | Crises | Liquidity | Funding | Brokered Desposits | Liquidity Regulation | Deposit Insurance | United States.
 
English
Publication Date: July 01, 2011
Format: Paper
Stock No: WPIEA2011180 Pages: 28
Price:
US$18.00 (Academic Rate:
US$18.00 )
 
 
Please address any questions about this title to publications@imf.org