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

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  • Pierluigi Bologna

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.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 11/180.

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Length: 28
Date of creation: 01 Jul 2011
Date of revision:
Handle: RePEc:imf:imfwpa:11/180

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Keywords: Banks; Liquidity; Deposit insurance; United States; Banking crisis; Bank supervision; Basel Core Principles; banking; capital adequacy; bank failure; banking crises; banking supervision; financial crisis; probability of default; federal deposit insurance; global financial crisis; bank failures; banking system; bank runs; prudential regulation; financial crises; banking system distress; early warning system; banking systems; return on equity; prudential bank supervision; short term debt; banking sector; banking legislation; balance-of-payment crisis; financial institutions reform; systemic crisis; banks ? balance sheets; capital adequacy ratio; banking system stability; asian crisis; bank funding; deposit insurance scheme; banks ? assets; bank default; bank examination;

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References

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Citations

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Cited by:
  1. McQuinn, Kieran & Woods, Maria, 2012. "Modelling the corporate deposits of Irish financial institutions: 2009 - 2010," Research Technical Papers 02/RT/12, Central Bank of Ireland.
  2. Adrian Van Rixtel & Gabriele Gasperini, 2013. "Financial crises and bank funding: recent experience in the euro area," BIS Working Papers 406, Bank for International Settlements.
  3. Jihad Dagher & Kazim Kazimov, 2012. "Banks' Liability Structure and Mortgage Lending During the Financial Crisis," IMF Working Papers 12/155, International Monetary Fund.
  4. Martin Cihák & Sonia Muñoz & Shakira Ten Sharifuddin & Kalin Tintchev, 2012. "Informes de estabilidad financieras: ¿cuál es su utilidad?," Boletín, Centro de Estudios Monetarios Latinoamericanos, vol. 0(3), pages 181-230, julio-sep.
  5. Tatom, John, 2011. "Predicting failure in the commercial banking industry," MPRA Paper 34608, University Library of Munich, Germany.
  6. Pablo Federico & Francisco F. Vázquez, 2012. "Bank Funding Structures and Risk," IMF Working Papers 12/29, International Monetary Fund.
  7. Sònia Muñoz & Samir Jahjah & Martin Cihák & Sharika Teh Sharifuddin & Kalin Tintchev, 2012. "Financial Stability Reports:What Are they Good for?," IMF Working Papers 12/1, International Monetary Fund.
  8. Fumiko Hayashi & William R. Keeton, 2012. "Medición de los costos de los métodos de pago minoristas," Boletín, Centro de Estudios Monetarios Latinoamericanos, vol. 0(3), pages 152-180, julio-sep.
  9. Ignacio Hernando & Jimena Llopis & Javier Vallés, 2012. "Los retos para la política económica en un entorno de tasas de interés próxima a cero," Boletín, Centro de Estudios Monetarios Latinoamericanos, vol. 0(3), pages 121-151, julio-sep.

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