Bank Debt in Europe: “Are Funding Models Broken”
IMF Working Papers, December 20, 2012
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Bibliographic details
- Authors: Vanessa Le Lesle
- Published: December 20, 2012
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781475522037.001
Overview
- Author: Vanessa Le Lesle
- Date: December 20, 2012
- Type: IMF Working Papers
- Core question: The paper studies the drivers behind the fragility of European bank funding models relative to international peers and examines the future of bank funding, primarily wholesale, in Europe.
- Central argument: Cyclical and structural factors have altered the structure, cost, and composition of funding for European banks, with consequences for funding patterns and investor preferences; the paper presents policy options and bank actions to enhance funding-model robustness.
Key findings
- The crisis in Europe highlighted the vulnerability of European bank funding models compared to international peers.
- Cyclical and structural factors have altered:
- the structure of funding for European banks,
- the cost of funding,
- the composition of funding (with an emphasis on wholesale funding).
- Shifting funding patterns and changing investor preferences affect bank liquidity and resilience.
Policy options and bank actions (themes discussed)
- Policy options to enhance European bank funding-model robustness (paper discusses multiple policy avenues; specifics are presented in the paper).
- Bank actions to improve funding resilience (paper discusses potential bank-level measures to respond to altered funding conditions).
Subjects and keywords (as listed)
- Subject: Asset and liability management, Bank deposits, Banking, Deposit insurance, Financial regulation and supervision, Financial statements, Liquidity, Liquidity requirements, Liquidity risk, Public financial management (PFM)
- Keywords: Asia and Pacific, bail-in, bank capital, bank creditor, bank debt, bank funding, bank lending, bank liability structure, Banks, Basel, deposits, Europe, Financial statements, funding, funding challenge, funding model, liabilities, liability structure, Liquidity, Liquidity requirements, Liquidity risk, profitability prospects, self-financing effort, senior debt, unsecured debt, WP