Bank creditor structure and bank risk during liquidity crises: A survey with policy implications

Abstract

This chapter surveys papers and the related literature on the relationship between banks’ creditor structure and bank risk during the period of liquidity crises. Departing from the conventional banking literature, which points to deteriorating asset quality to be the culprit for the amplified bank risk in the midst of financial crises, the studies in the aftermath of the global financial crisis look into the liability side of the bank balance sheet as a potential source for the augmented bank risk during the financial crisis when there is a liquidity contraction. Recent studies theorize and provide empirical evidence that banking institutions with a greater share of large lenders and an economy with high noncore bank liabilities in the banking sector may experience heightened bank risk or country risk. We also search for policy implications from this survey.

Citation

Park, J., Shin, H.-H. and Ho Suh, J. (2013), "Bank creditor structure and bank risk during liquidity crises: A survey with policy implications", Global Banking, Financial Markets and Crises (International Finance Review, Vol. 14), Emerald Group Publishing Limited, Leeds, pp. 433-447. https://doi.org/10.1108/S1569-3767(2013)0000014017