tailieunhanh - Bank Funding Structures and Risk: Evidence from the Global Financial Crisis

record of Australia is too patchy for paleontologists to say whether there were any placental mammals in Australia at this time. Abundant Australian fossils date back to about 25 million years ago, at which point all the mammals in Austrlia were marsupials. They evolved into a spectacular range of forms, including kan- garoos and koalas. It was not until 15 million years ago that Australia moved close enough to Asia to allow placental mammals—rats and bats—to begin to colonize the continent. These invaders diversified into many ecological niches, but they don’t seem to have displaced any of the marsupial species that were already there. Isolated islands have also. | WP 12 29 Bank Funding Structures and Risk Evidence from the Global Financial Crisis Francisco Vazquez and Pablo Federico INTERNATIONAL MONETARY FUND 2012 International Monetary Fund WP 12 29 IMF Working Paper European Department Bank Funding Structures and Risk Evidence from the Global Financial Crisis1 Prepared by Francisco Vazquez and Pablo Federico Authorized for distribution by Enrica Detragiache January 2012 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. Abstract This paper analyzes the evolution of bank funding structures in the run up to the global financial crisis and studies the implications for financial stability exploiting a bank-level dataset that covers about 11 000 banks in the . and Europe during 2001-09. The results show that banks with weaker structural liquidity and higher leverage in the pre-crisis period were more likely to fail afterward. The likelihood of bank failure also increases with bank risk-taking. In the cross-section the smaller domestically-oriented banks were relatively more vulnerable to liquidity risk while the large crossborder banks were more susceptible to solvency risk due to excessive leverage. The results support the proposed Basel III regulations on structural liquidity and leverage but suggest that emphasis should be placed on the latter particularly for the systemically-important institutions. Macroeconomic and monetary conditions are also shown to be related with the likelihood of bank failure providing a case for the introduction of a macro-prudential approach to banking regulation. JEL Classification Numbers G21 G28 Keywords Bank capital bank liquidity creation financial crisis Basel III macro-prudential regulations Author s E-Mail .