Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/212337 
Year of Publication: 
2015
Series/Report no.: 
Bank of Finland Research Discussion Papers No. 29/2015
Publisher: 
Bank of Finland, Helsinki
Abstract: 
We investigate how European banks' overnight borrowing costs depend on bank size. We use the Eurosystem's proprietary interbank daily loan data on euro-denominated transactions from 2008-2014. We find that large banks have had a clear borrowing cost advantage over small banks and that this premium increases progressively with the size of the bank. This result is robust with respect to subsamples, subperiods, time aggregation, and control variables such as Tier 1 capital ratio and rating. During episodes of financial stress, the size advantage becomes several times larger. However, we also find evidence that the new recovery and resolution framework for banks may have slightly reduced the borrowing cost advantage of larger banks in Europe.
JEL: 
G21
G22
G24
G28
Persistent Identifier of the first edition: 
ISBN: 
978-952-323-081-1
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.