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The Transmission of Liquidity Shocks
By:Philippe D. Karam,Ouarda Merrouche,Moez Souissi,Rima Turk Ariss,Centre for Economic Policy Research (Great Britain)
Published on 2014 by

We analyze the transmission of bank-specific liquidity shocks triggered by a credit rating downgrade through the lending channel. Using bank-level data for US Bank Holding Companies, we find that a credit rating downgrade is associated with an immediate and persistent decline in access to non-core deposits and wholesale funding, especially during the global financial crisis. This translates into a reduction in lending to households and non-financial corporates at home and abroad. The effect on domestic lending, however, is mitigated when banks (i) hold a larger buffer of liquid assets, (ii) diversify away from rating-sensitive sources of funding, and (iii) activate internal liquidity support measures. Foreign lending is significantly reduced during a crisis at home only for subsidiaries with weak funding self-sufficiency.

This Book was ranked at 12 by Google Books for keyword Credit channel.

Book ID of The Transmission of Liquidity Shocks's Books is VpUNrgEACAAJ, Book which was written byPhilippe D. Karam,Ouarda Merrouche,Moez Souissi,Rima Turk Ariss,Centre for Economic Policy Research (Great Britain)have ETAG "5hANuzoUMMo"

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