Ownership Networks Effects on Secured Borrowing

CentER Discussion Paper Series No. 2018-015

35 Pages Posted: 8 May 2018

See all articles by Constanza Martinez Ventura

Constanza Martinez Ventura

Banco de la Republica

Pavel Cizek

Tilburg University - Department of Econometrics & Operations Research

Carlos León

Tilburg University - Center for Economic Research (CentER); Financial Network Analytics Ltd

Date Written: April 23, 2018

Abstract

The secured borrowing based on sell/buy-backs agreements is studied, specifically considering both: quantity and price. The empirical evidence presented in this paper suggests that, after controlling for specific individual characteristics, group-specific effects (defined by belonging or not to a financial group) play a relevant role in this market. Using spatial panel data models, we find that the amount of liquidity obtained with sell/buy-backs depend on traditional determinants (institution’s size and financial leverage), but also, on the average size of the financial group to which the financial institution belongs. Similarly, the borrowing cost depends on the amount of liquidity, but the average profitability of the financial group is also significant. Our results are robust to different relationship structures specified for financial groups.

Keywords: funding costs, short-term liquidity, spatial panel data models

JEL Classification: C33, G20, G32

Suggested Citation

Martinez Ventura, Constanza and Cizek, Pavel and León, Carlos, Ownership Networks Effects on Secured Borrowing (April 23, 2018). CentER Discussion Paper Series No. 2018-015, Available at SSRN: https://ssrn.com/abstract=3167163 or http://dx.doi.org/10.2139/ssrn.3167163

Constanza Martinez Ventura (Contact Author)

Banco de la Republica ( email )

Carrera 7 #14-78
Bogota
Colombia
(571)3431111 (Phone)

Pavel Cizek

Tilburg University - Department of Econometrics & Operations Research ( email )

Tilburg, 5000 LE
Netherlands

Carlos León

Tilburg University - Center for Economic Research (CentER) ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Financial Network Analytics Ltd ( email )

London
United Kingdom

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