Bank Liquidity and the Global Financial Crisis - The Causes and Implications of Regulatory Reform

Foreword

Contents

About the Author

Acronyms and Abbreviations

List of Figures

List of Tables

Chapter 1 Introduction

Chapter 2 The Concept of Bank Liquidity and Its Risk

2.1 Definition of Bank Liquidity

2.1.1 Central Bank Liquidity

2.1.2 Funding Liquidity

2.1.3 Market Liquidity

2.2 Liquidity Risk: Definition and Multidimensionality

2.2.1 Central Bank Liquidity Risk

2.2.2 Funding Liquidity Risk

2.2.3 Market Liquidity Risk

2.3 Liquidity Interconnections in Normal and Turbulent Periods

2.4 The Linkages Between Liquidity and Solvency

2.5 The Relationships Between Liquidity Risk and Other Typical Bank Risks

2.6 The Aggravating Factors of Liquidity Risk

References

Chapter 3 The Bank Liquidity Issues During the Subprime Crisis

3.1 The Subprime Crisis

3.1.1 The Origin

3.1.2 Triggering Factors

3.2 Bank Liquidity Problems During the Subprime Crisis

3.2.1 The Characteristics of the Banks Most Affected by the Liquidity Crisis of 2007–2009

3.2.2 The Relationship Between Liquidity and Solvency Problems and Their Impact on Bank Stability

3.2.3 The Main Lessons from the GFC with Particular Reference to Bank Liquidity

3.3 Liquidity Crises: Common Features and Some Prevention and Management Policies

References

Chapter 4 The Role of Central Banks and the Interbank Market in Managing Bank Liquidity During the Global Financial Crisis

4.1 Central Banks, the Interbank Market and Bank Liquidity Management

4.2 The Liquidity Management Instruments of Leading Central Banks

4.3 The Monetary Policy Actions Used by Leading Central Banks in Response to the GFC

4.4 The Role of the Interbank Market in Financial Crises: Theories and Empirical Evidence

4.5 The Functioning of the Interbank Market During the Financial Crisis

References

Chapter 5 Bank Liquidity Regulation Before the Global Financial Crisis

5.1 Liquidity Risk Management: Regulation Before the Financial Crisis

5.2 The Building Blocks of the Liquidity Risk Management Process

5.2.1 The Liquidity Governance Model

5.2.2 The Operating Limits System

5.2.3 Liquidity Risk Measurement

5.2.4 Policies and Operational Levers

5.2.5 Control Activities

5.2.6 Internal Communication and Disclosure

5.3 The Role of the Supervisors

References

Chapter 6 The New International Liquidity Regulatory Framework for Banks

6.1 Liquidity Risk: Regulatory Issues

6.2 Common Principles for Sound Liquidity Management and Supervision

6.3 The Minimum Liquidity Standards of Basel III

6.3.1 The Liquidity Coverage Ratio

6.3.2 The Net Stable Funding Ratio

6.4 Monitoring Tools to Assess Liquidity Risk

References

Chapter 7 The Implications of Basel III Liquidity Regulatory Reform

7.1 Introduction

7.2 Possible Strategies for Banks to Meet Basel III Liquidity Ratios: Costs and Benefits

7.3 An Empirical Literature Review of the Impact of the Liquidity Requirements on Bank Behaviour

7.4 Bank Compliance with Basel III Liquidity Ratios: An Overview of Quantitative Impact Studies

References

Chapter 8 Conclusion

Reference

Index