This paper examines the relation between bank funding structure and lending to firms during periods of liquidity shocks. We analyze this relation by using quarterly loan panel data of all commercial banks in Korea, as well as their borrowing firms. We find that when liquidity shocks are severe, banks generally reduce their lending, but banks with a high core funding ratio tend rather to increase their lending to firms during periods of market-wide liquidity shocks and thereby the reduction in lending due to liquidity shocks is offset. This tendency is stronger in banks that maintain relationship banking with the firms. However, these findings are valid only for large banks. Our findings could provide some important policy implications for financial supervisory authorities seeking some regulatory policies on liquidity as in Basel III.
JEL classification: G21, G29, G32
Keywords: Bank funding structure; Core funding; Bank lending; Relationship banking; Liquidity shock
학회소식
[2013년 제 4차] Bank Funding Structure and Lending under Liquidity
작성자 : 관리자
조회수 : 866
게시일 :
2013-12-16
