The 2007–08 financial crisis was the biggest shock to the banking system since the 1930s, raising fundamental questions about liquidity risk. The global financial system experienced urgent demands for cash from various sources, including counterparties, short-term creditors, and, especially, existing borrowers. Credit fell, with banks hit hardest by liquidity pressures cutting back most [...]
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Posted on May 20th, 2012
Posted on May 20th, 2012
What determined the corporate use of credit lines in the recent financial crisis? To address this question this paper hand-collects data on credit lines and interest rate hedging for a random sample of 600 COMPUSTAT firms. The authors document that drawdowns of credit lines had already increased in 2007, earlier than what previous [...] Posted on May 13th, 2012
The outflow factors assigned under Article 412 are not considered appropriate and it is suggested that a recalibration to reflect more realistic rates is needed. This is particularly the case in relation to the 100% outflow factor assigned under Article 412(4) to facilities for financial customers, which could include the treasury functions of [...] Posted on May 13th, 2012
According to AFME, the current CRD IV text proposes a fairly narrow definition of liquid asset buffers which would lead to a concentration in eligible assets. Meanwhile inconsistencies between the EU and other jurisdictions could cause level playing field concerns and it appears counter‐intuitive to require that liquid assets are located where liquidity [...] Posted on May 6th, 2012
Stable funding is vital for banks and the financial system. This warrants analysis of the significance of a reliable, low-cost way for banks to refinance their operations: deposits. Deposits play an important role for both consumers and financial services providers: in Europe, deposits account for approximately 60% of bank funding. The chief providers [...] 76 pages
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