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Bank Liquidity Creation
Resource type
Authors/contributors
- Berger, Allen N. (Author)
- Bouwman, Christa H. S. (Author)
Title
Bank Liquidity Creation
Abstract
Although the modern theory of financial intermediation portrays liquidity creation as an essential role of banks, comprehensive measures of bank liquidity creation do not exist. We construct four measures and apply them to data on virtually all U.S. banks from 1993 to 2003. We find that bank liquidity creation increased every year and exceeded $2.8 trillion in 2003. Large banks, multibank holding company members, retail banks, and recently merged banks created the most liquidity. Bank liquidity creation is positively correlated with bank value. Testing recent theories of the relationship between capital and liquidity creation, we find that the relationship is positive for large banks and negative for small banks.
Publication
The Review of Financial Studies
Volume
22
Issue
9
Pages
3779-3837
Date
2009-09-01
Journal Abbr
The Review of Financial Studies
ISSN
0893-9454
Accessed
5/1/24, 1:23 PM
Library Catalog
Silverchair
Citation
Berger, A. N., & Bouwman, C. H. S. (2009). Bank Liquidity Creation. The Review of Financial Studies, 22, 3779–3837.
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