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Modelling the corporate deposits of Irish financial institutions: 2009 - 2010

Author

Listed:
  • McQuinn, Kieran

    (Central Bank of Ireland)

  • Woods, Maria

    (Central Bank of Ireland)

Abstract

This paper examines the corporate funding flows of Irish credit institutions over the period 2009 to end-2010. The analysis examines the daily net movement across the consolidated corporate and retail deposit books of the domestic Irish banking sector and models these flows as a function of bank specific measures of risk, sovereign influences and general macro-financial conditions. The international financial crisis resulted in Irish banking institutions experiencing more acute funding difficulties than institutions elsewhere. Over the period 1995 to 2007, Irish credit institutions had engaged in a remarkable surge in concentrated lending to the commercial and residential property sector. The collapse in prices and activity in both markets post-2007 coupled with the downturn in general economic activity are the main reasons why Irish banks now rely substantially on liquidity support from the ECB and the Irish Central Bank. This situation is clearly unsustainable in the longer term and, in returning these institutions to a more viable longer-term path of market based funding, a greater understanding of the deposit flows of financial institutions is required.

Suggested Citation

  • 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.
    • Handle: RePEc:cbi:wpaper:02/rt/12
    as

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    File URL: https://centralbank.ie/docs/default-source/publications/research-technical-papers/research-technical-paper-02rt12.pdf?sfvrsn=8
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    References listed on IDEAS

    as
    1. Masahiro Hori & Yasuaki Ito & Keiko Murata, 2009. "Do Depositors Respond Rationally To Bank Risks? Evidence From Japanese Banks During Crises," Pacific Economic Review, Wiley Blackwell, vol. 14(5), pages 581-592, December.
    2. Huang, Rocco & Ratnovski, Lev, 2011. "The dark side of bank wholesale funding," Journal of Financial Intermediation, Elsevier, vol. 20(2), pages 248-263, April.
    3. Pierluigi Bologna, 2011. "Is there a Role for Funding in Explaining Recent U.S. Banks' Failures?," IMF Working Papers 11/180, International Monetary Fund.
    4. Trevor Fitzpatrick & Kieran Mcquinn, 2007. "House Prices And Mortgage Credit: Empirical Evidence For Ireland," Manchester School, University of Manchester, vol. 75(1), pages 82-103, January.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Banks; Deposit; Financial Crisis;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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