Download This PaperFunding Structure and Commercial Bank Failures
45 Pages Posted: 3 Jun 2019 Last revised: 28 Apr 2025
Date Written: May 31, 2024
Abstract
This study investigates non-fundamental factors affecting U.S. commercial banks’ funding costs during the Great Recession, amidst numerous bank failures post-crisis. It explores whether funding cost changes were market-wide, detached from policy fundamentals, or bank-specific, unrelated to bank fundamentals. Findings show market-wide funding cost shifts align with policy rate changes, while the gap in funding costs between failed and nonfailed banks decreases significantly when solvency risk is considered. Contrary to their presumed higher fragility, non-core liabilities exhibit similar behavior to core deposits in the time series. Overall, funding composition signals, rather than causes, bank failures.
Keywords: bank failures, core deposits, wholesale funding, monetary policy JEL Classification: G21, G28, G32, E50
JEL Classification: G21, G28, G32, E50
Suggested Citation: Suggested Citation
Antoniades, Adonis, Funding Structure and Commercial Bank Failures (May 31, 2024). Available at SSRN: https://ssrn.com/abstract=3385407 or http://dx.doi.org/10.2139/ssrn.3385407
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