Unsecured and Secured Funding
Series
School of Finance Working Paper Series
Type
working paper
Date Issued
2016-08-01
Author(s)
Abstract (De)
We provide the first joint analysis of the secured and unsecured money markets of the euro area using bank-level data. After the Lehman crisis, two important substitution mechanisms emerge: banks with higher credit risk offset reductions of unsecured borrowing with secured funding. Riskier banks replace unsecured lending by granting more secured loans. However, high leverage and reliance on short-term funding hamper banks' ability to substitute. Moreover, banks enduring money market strains contribute to the credit crunch. Overall, our findings suggest that the secured segment of the euro money market contributes to financial stability, mitigating systemic effects such as short-term funding strains and contagion.
Language
English
HSG Classification
contribution to scientific community
HSG Profile Area
None
Publisher
SoF - HSG
Publisher place
St. Gallen
Volume
2016/16
Number
16
Pages
29
Subject(s)
Eprints ID
249046
File(s)![Thumbnail Image]()
open.access
Name
Q__SOF_WP_Papers_16_16_Ranaldo et al_Unsecured and Secured Funding.pdf
Size
289.35 KB
Format
Adobe PDF
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