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Title:Insights on Banks' Liquidity Management: Evidence from Regulatory Liquidity Data PDF Logo
Authors:Schertler, Andrea
Issue Date:2010
Series/Report no.:Beiträge zur Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie - Session: Banking Regulation: Liquidity and Regulatory Capital A7-V2
Abstract:I investigate how banks manage liquidity as specified in the German prudential liquidity regulation, which combines a stock and cash-flow mapping approach. To do so, I use dynamic panel data regressions, take into account that payment obligations are endogenous and test whether banks whose liquidity is already close to the regulatory threshold purchase additional liquidity, more intensively match their cash inflows and outflows, or whether they perform an asset-side accounting exchange by decreasing illiquid assets, such as new long-term loans, and increasing liquid assets. The results suggest that commercial banks rely more intensively on markets when managing their liquidity, while savings and cooperative banks focus more on matching their cash inflows and outflows. Banks of all three types, except large commercial banks, also perform asset-side accounting exchanges and reduce their new long-term loans more when they need more liquid assets.
Subjects:Prudential liquidity regulation
payment obligations
long-term loans
JEL:G21
G32
G38
Document Type:Conference Paper
Appears in Collections:Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie

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