The impacts of Net Stable Funding Ratio requirement on Banks’ choices of debt maturity

The Impact of Net Stable Funding Ratio on Bank Performance and Risk Around the World

“…These findings are consistent with all three models as well as with the use of two risk variables (SDROA and SDROE). Our results support Wei et al (2017), Ly et al (2017), Bologna (2013, King (2013), andVazquez andFederico (2015). Thus, we conclude that higher liquidity helps in reducing bank risk.…”

“…We hypothesize that liquidity leads to lower bank performance since banks with high liquidity will lose profitable opportunities from loans (Acharya & Naqvi, 2012). Our second hypothesis is that liquidity reduces risk because it limits over-reliance on short-term yet unstable wholesale funding, hence lowering bank failures, systematic, and liquidity risk (Wei et al, 2017;Ly et al, 2017;Bologna, 2013).…”

How does bank equity affect credit creation? Multiplier effects under Basel III regulations

“…VanHoose (2007). Recently, several papers use theoretical banking models to exhibit the effects that arise from liquidity regulations, such as the LCR's impact on interbank rates (Bech and Keister, 2017), the price of the securities qualified as high-quality liquid assets (Fuhrer et al, 2017), the resilience of banks (König, 2015), systemic risk measured by the fraction of banks not able to meet CAR or LCR requirements (Aldasoro and Faia, 2016), and the NSFR's influence on banks' debt maturity (Wei et al, 2017).…”

The prudential role of Basel III liquidity provisions towards financial stability

“…However, the NSFR framework contributes on the stability of the financial system. Finally, Wei et al (2017) developed a theoretical framework for investigating the impact of NSFR on banks' profitability and the utilization of short-term debt, which is a component of the NSFR. They conclude that NSFR contributes in banks profitability and reduces the number of bank failures/bankruptcies.…”