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

July 1, 2011

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Format: Chicago

Pierluigi Bologna. Is there a Role for Funding in Explaining Recent U.S. Banks' Failures?, (USA: International Monetary Fund, 2011) accessed November 23, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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.

Subject: Bank deposits, Banking, Capital adequacy requirements, Deposit insurance, Distressed institutions, Financial crises, Financial institutions, Financial regulation and supervision, Nonperforming loans

Keywords: Asset size, Bank, Bank si, Banks, Banks' default, Banks' status, Brokered Desposits, Capital adequacy requirements, Crises, Default, Defaulted bank, Deposit, Deposit Insurance, Distressed institutions, Funding, Funding mix, Global, Liquidity, Liquidity condition, Liquidity Regulation, Macroeconomic variable, Management action, Nonperforming loans, Risk profile, United States, WP

Publication Details

Pages:

28
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2011/180
Stock No:

WPIEA2011180
ISBN:

9781462311286
ISSN:

1018-5941

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