Journal of Financial Intermediation Vol. 35 2018
The impact of liquidity regulation on banks
Abstract
We estimate the causal effect of liquidity regulation on bank balance sheets. We take advantage of the heterogeneous implementation of tighter liquidity regulation by the UK Financial Services Authority in 2010. We find that banks adjusted the composition of both assets and liabilities, increasing the share of high quality liquid assets and non-financial deposits while reducing intra-financial loans and short-term wholesale funding. We do not find evidence that the tightening of liquidity regulation caused banks to shrink their balance sheets, nor reduce the amount of lending to the non-financial sector.
- DOI
- 10.1016/j.jfi.2017.05.008
- Volume
- 35
- Pages
- 30-44
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref