Unsecured and Secured Funding

Item Type Monograph (Working Paper)
Abstract

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.

Authors di Filippo, Mario; Ranaldo, Angelo & Wrampelmeyer, Jan
Language English
Subjects finance
HSG Classification contribution to scientific community
HSG Profile Area None
Date 1 August 2016
Publisher SoF - HSG
Place of Publication St. Gallen
Series Name School of Finance Working Paper Series
Volume 2016/16
Number 16
Number of Pages 29
Depositing User Geraldine Frei-Böbel
Date Deposited 18 Aug 2016 13:56
Last Modified 18 Jun 2021 00:23
URI: https://www.alexandria.unisg.ch/publications/249046

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Citation

di Filippo, Mario; Ranaldo, Angelo & Wrampelmeyer, Jan: Unsecured and Secured Funding. School of Finance Working Paper Series, 2016, 16.

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https://www.alexandria.unisg.ch/id/eprint/249046
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