Insights on Banks' Liquidity Management: Evidence from Regulatory Liquidity Data

Konferenzbeitrag

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Beiträge zur Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie - Session: Banking Regulation: Liquidity and Regulatory Capital ; No. A7-V2

Classification and Topics

• Classification: Wirtschaft ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages ; Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill ; Corporate Finance and Governance: Government Policy and Regulation
• Subject: Prudential liquidity regulation ; payment obligations ; long-term loans

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Schertler, Andrea
• Event: Veröffentlichung
• (who): Verein für Socialpolitik
• (where): Frankfurt a. M.
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/37537
• Last update: 10.03.2025, 11:45 AM CET