Arbeitspapier

Banks fearing the drought? Liquidity hoarding as a response to idiosyncratic interbank funding dry-ups

We investigate whether idiosyncratic interbank funding shocks affecting a bank headquarters can trigger a liquidity hoarding reaction by their regional branches. Shock-affected branches of Brazilian banks increase liquid assets and cut lending in the shocks' aftermath compared to non-affected branches within the same municipality, even in absence of a market-wide freeze. These effects increase in branches' reliance on internal funding and vary depending on banks' access to central bank emergency liquidity. Our findings suggest that the geographical fragmentation of branches' funding limits their ability to offset idiosyncratic funding shocks.

ISBN
978-3-95729-824-9
Language
Englisch

Bibliographic citation
Series: Deutsche Bundesbank Discussion Paper ; No. 16/2021

Classification
Wirtschaft
Financial Crises
Portfolio Choice; Investment Decisions
Banks; Depository Institutions; Micro Finance Institutions; Mortgages
Subject
Interbank funding
Internal capital markets
Financial market structure
Liquidity risk
Central bank interventions

Event
Geistige Schöpfung
(who)
Littke, Helge
Ossandon Busch, Matias
Event
Veröffentlichung
(who)
Deutsche Bundesbank
(where)
Frankfurt a. M.
(when)
2021

Handle
Last update
10.03.2025, 11:44 AM CET

Data provider

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ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.

Object type

  • Arbeitspapier

Associated

  • Littke, Helge
  • Ossandon Busch, Matias
  • Deutsche Bundesbank

Time of origin

  • 2021

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