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Unsecured and Secured Funding

Journal
Journal of Money, Credit and Banking
ISSN
0022-2879
Type
journal article
Date Issued
2021-07-20
Author(s)
Di Filippo, Mario
Ranaldo, Angelo  
Wrampelmeyer, Jan  
DOI
https://doi.org/10.1111/jmcb.12855
Abstract
We study how individual banks borrow and lend in the euro unsecured and secured interbank market. We find that banks with lower credit worthiness replace unsecured with secured borrowing, which is consistent with a reduction in the supply of unsecured loans rather than a lower demand for funding. Riskier lenders replace unsecured with secured lending, suggesting that banks take precautionary measures and prefer to lend against safe collateral. Our results highlight the importance of a joint analysis of unsecured and secured funding. Separate analyses only give a partial view and might yield misleading conclusions when banks
access both funding sources.
Language
English
Keywords
Interbank market
funding risk
unsecured funding
secured funding
counterparty credit risk
HSG Classification
contribution to scientific community
HSG Profile Area
SOF - System-wide Risk in the Financial System
Refereed
Yes
Publisher
Wiley-Blackwell
Volume
54
Number
2-3
Start page
651
End page
662
URL
https://www.alexandria.unisg.ch/handle/20.500.14171/110205
Subject(s)

finance

Division(s)

s/bf - Swiss Institut...

SoF - School of Finan...

Eprints ID
261696

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