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International Banking and Liquidity Risk Transmission: Evidence from France

Author

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  • Matthieu Bussiere
  • Boubacar Camara
  • Francois-Daniel Castellani
  • Vincent Potier
  • Julia Schmidt

Abstract

The Banque de France contribution analyzes the effect of liquidity risk on domestic and foreign lending, credit and intragroup funding by French banking groups. The paper finds that a higher core deposit ratio, a higher commitment ratio, and a low ratio of illiquid assets are associated with higher growth of certain types of lending during times of liquidity risk. These effects are mitigated when public liquidity is accessed, thus confirming that public liquidity provision was conducive to maintaining lending growth. Most importantly, it finds that the quantitative importance of liquidity risk is more pronounced for foreign lending, which may suggest that the particular banking model of French banks and the strong domestic retail sector contributed to the stability of domestic credit.

Suggested Citation

  • Matthieu Bussiere & Boubacar Camara & Francois-Daniel Castellani & Vincent Potier & Julia Schmidt, 2015. "International Banking and Liquidity Risk Transmission: Evidence from France," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 63(3), pages 479-495, November.
    • Handle: RePEc:pal:imfecr:v:63:y:2015:i:3:p:479-495
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    1. repec:bfr:rueban:18 is not listed on IDEAS
    2. Khemais Zaghdoudi & Abdelaziz Hakimi, 2017. "The Determinants of Liquidity Risk: Evidence from Tunisian Banks," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 7(2), pages 1-5.
    3. Legroux, Vincent & Rahmouni-Rousseau, Imène & Szczerbowicz, Urszula & Valla, Natacha, 2022. "Stabilising virtues of central banks: (Re)matching bank liquidity," Journal of Banking & Finance, Elsevier, vol. 134(C).
    4. Bussière, M. & Schmidt, J. & Camara, B. & Castellani, F.-D. & Potier, V., 2016. "The transmission of liquidity risk through international banks," Rue de la Banque, Banque de France, issue 18, February..

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