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Stefan Morkötter
Title
Prof. Dr.
Last Name
Morkötter
First name
Stefan
Email
stefan.morkoetter@unisg.ch
Phone
+65 68507 338
Homepage
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PublicationThe Liquidity Dynamics of Bank DefaultsWe compare liquidity patterns of 10,979 failed and non-failed US banks from 2001 to mid-2010 and detect diverging capital structures: failing banks distinctively change their liquidity position about three to five years prior to default by increasing liquid assets and decreasing liquid liabilities. The build-up of liquid assets is primarily driven by short term loans, whereas long term loan positions are significantly reduced. By abandoning (positive) term transformation throughout the intermediate period prior to a default, failing banks drift away from the traditional banking business model. We show that this liquidity shift is induced by window dressing activities towards bondholders and money market investors as well as a bad client base.Type: journal articleJournal: European Financial ManagementVolume: 20Issue: 2
Scopus© Citations 3