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Is there a role for funding in explaining recent US bank failures?

  • Pierluigi Bologna

    ()

    (Banca d'Italia)

This paper tests the role of different banks� liquidity funding structures in explaining the bank failures that 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 a 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 needed to strengthen banks� liquidity conditions and improve financial stability. Its correct implementation, together with closer supervision of banks� liquidity and funding conditions, appear decisive, however, if such improvements are to be achieved.

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File URL: http://www.bancaditalia.it/pubblicazioni/qef/2011-0103/QEF_103.pdf
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Paper provided by Bank of Italy, Economic Research and International Relations Area in its series Questioni di Economia e Finanza (Occasional Papers) with number 103.

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Date of creation: Oct 2011
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Handle: RePEc:bdi:opques:qef_103_11
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Web page: http://www.bancaditalia.it

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