Journal of Financial and Quantitative Analysis Vol. 53 No. 2 2018
Short-Term Debt and Bank Risk
Abstract
The extant literature suggests that one of the main causes of the recent financial crisis was the excessive use of short-term debt by banks. Using a large sample of banks, we find that increases in repurchase agreements (repos) were recognized by external capital markets to increase bank risk in the pre-crisis period. In the crisis, we find a negative relationship between repos and risk. We attribute this result to evidence suggesting that “good” banks were able to continue funding their repos, whereas “bad” banks had to significantly decrease their repo funding.
- DOI
- 10.1017/s0022109017001132
- Volume
- 53
- Issue
- 2
- Pages
- 815-835
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref