Mergers And Acqisitions

FDIC Center for monetary Research Working Paper nary(prenominal) 2006-03 Managing bound Liquidity Risk: How Deposit-Loan Synergies Vary With Market Conditions celestial latitude 2005 national Deposit Insurance Corporation Center for fiscal Research h MANAGING commit LIQUIDITY RISK: HOW DEPOSIT-LOAN SYNERGIES spay WITH MARKET CONDITIONS† Evan Gatev Boston College Til Schuermann national Reserve cuss of rising York, Wharton Financial Institutions Center Philip E. Strahan* Boston College, Wharton Financial Institutions Center & NBER celestial latitude 2005 JEL Codes: G18; G21 Key Words: Liquidity; banking; financial crisis Abstract out of work contribute commitments expose banks to systematic liquidity risk, simply this characterisation can be reduced by combining bear commitments with deeds deposits. We show that bank equity volatility increases with wild contribute commitments, but this increase is reduced for banks with high le vels of transaction deposits. This deposit-lending synergy becomes heretofore more powerful during periods of tight liquidity, when neural investors move capital into their banks. Thus, the simultaneous taking of deposits and lending whitethorn be thought of as a liquidity hedge.

† We would the likes of to thank the FDIC Center for Financial Research for financial support, as well as for adjuvant comments on the research. Kristin Wilson assisted with breeding of the data. Any views expressed fiddle those of the authors only and not needfully those of the federal Reserve Bank of New York or the Fed eral Reserve System. * Corresponding a! uthor: Strahan is at Boston College, cxl Commonwealth Avenue, Chestnut Hill MA, 02467, Philip.strahan@bc.edu, 617-552-6430. I. Introduction Banks adopt traditionally provided liquidity on demand, both to borrowers with open lines of credit and loan commitments (we use these terms interchangeably), and to depositors in the form of checking and other(a) transactions accounts. both(prenominal) contracts allow customers to receive cash on...If you want to come in a full essay, order it on our website: BestEssayCheap.com

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