No Cover Image

Journal article 985 views 260 downloads

Funding liquidity risk and internal market in the multi-bank holding companies: Diversification or internalization?

Kim Cuong Ly Orcid Logo, Katsutoshi Shimizu

International Review of Financial Analysis, Volume: 57, Pages: 77 - 89

Swansea University Author: Kim Cuong Ly Orcid Logo

  • 1-s2.0-S105752191730217X-main.pdf

    PDF | Accepted Manuscript

    © 2018. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/

    Download (379.46KB)

Check full text

DOI (Published version): 10.1016/j.irfa.2017.12.011

Abstract

This study examines how a multi-bank holding company (MBHC) manages funding liquidity risk through its internal liquidity market, how its internal liquidity market works, and the benefits that its member banks enjoy. The results provide evidence that the diversification effect mostly dominates the i...

Full description

Published in: International Review of Financial Analysis
ISSN: 1057-5219
Published: 2018
Online Access: Check full text

URI: https://cronfa.swan.ac.uk/Record/cronfa37745
Tags: Add Tag
No Tags, Be the first to tag this record!
first_indexed 2017-12-30T05:04:23Z
last_indexed 2020-07-15T12:57:32Z
id cronfa37745
recordtype SURis
fullrecord <?xml version="1.0"?><rfc1807><datestamp>2020-07-15T12:17:37.4747633</datestamp><bib-version>v2</bib-version><id>37745</id><entry>2017-12-29</entry><title>Funding liquidity risk and internal market in the multi-bank holding companies: Diversification or internalization?</title><swanseaauthors><author><sid>06f8b2f66ecfb3ec21bd129e86e3e0ea</sid><ORCID>0000-0001-5856-4560</ORCID><firstname>Kim</firstname><surname>Cuong Ly</surname><name>Kim Cuong Ly</name><active>true</active><ethesisStudent>false</ethesisStudent></author></swanseaauthors><date>2017-12-29</date><deptcode>BAF</deptcode><abstract>This study examines how a multi-bank holding company (MBHC) manages funding liquidity risk through its internal liquidity market, how its internal liquidity market works, and the benefits that its member banks enjoy. The results provide evidence that the diversification effect mostly dominates the internalization effect. A new entrant into an MBHC structure benefits from holding lower liquidity and raising deposits at lower costs than a non-MBHC structure, suggesting that MBHCs have enjoyed scant liquidity at the cost of mismatch risk. We find that other member banks also enjoy the benefits of diversified risk when a new entrant joins, suggesting that MBHCs manage liquidity in response to changes in funding liquidity risk. However, internalization is more important for MBHCs that have large numbers of subsidiaries. Whichever types of mergers/acquisitions are chosen by an MBHC, the diversification effect appears. Basel III liquidity regulations would mitigate the mismatch risk at the cost of distorted internal liquidity markets.</abstract><type>Journal Article</type><journal>International Review of Financial Analysis</journal><volume>57</volume><paginationStart>77</paginationStart><paginationEnd>89</paginationEnd><publisher/><issnElectronic>1057-5219</issnElectronic><keywords>funding liquidity risk, merger and acquisition, bank holding company, Basel III, Net Stable Funding Ratio</keywords><publishedDay>31</publishedDay><publishedMonth>5</publishedMonth><publishedYear>2018</publishedYear><publishedDate>2018-05-31</publishedDate><doi>10.1016/j.irfa.2017.12.011</doi><url/><notes/><college>COLLEGE NANME</college><department>Accounting and Finance</department><CollegeCode>COLLEGE CODE</CollegeCode><DepartmentCode>BAF</DepartmentCode><institution>Swansea University</institution><apcterm/><lastEdited>2020-07-15T12:17:37.4747633</lastEdited><Created>2017-12-29T22:36:20.2221955</Created><path><level id="1">Faculty of Humanities and Social Sciences</level><level id="2">School of Management - Accounting and Finance</level></path><authors><author><firstname>Kim</firstname><surname>Cuong Ly</surname><orcid>0000-0001-5856-4560</orcid><order>1</order></author><author><firstname>Katsutoshi Shimizu</firstname><surname/><order>2</order></author></authors><documents><document><filename>0037745-17012018100524.pdf</filename><originalFilename>1-s2.0-S105752191730217X-main.pdf</originalFilename><uploaded>2018-01-17T10:05:24.1500000</uploaded><type>Output</type><contentLength>366312</contentLength><contentType>application/pdf</contentType><version>Accepted Manuscript</version><cronfaStatus>true</cronfaStatus><embargoDate>2019-08-10T00:00:00.0000000</embargoDate><documentNotes>&#xA9; 2018. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/</documentNotes><copyrightCorrect>true</copyrightCorrect><language>eng</language></document></documents><OutputDurs/></rfc1807>
spelling 2020-07-15T12:17:37.4747633 v2 37745 2017-12-29 Funding liquidity risk and internal market in the multi-bank holding companies: Diversification or internalization? 06f8b2f66ecfb3ec21bd129e86e3e0ea 0000-0001-5856-4560 Kim Cuong Ly Kim Cuong Ly true false 2017-12-29 BAF This study examines how a multi-bank holding company (MBHC) manages funding liquidity risk through its internal liquidity market, how its internal liquidity market works, and the benefits that its member banks enjoy. The results provide evidence that the diversification effect mostly dominates the internalization effect. A new entrant into an MBHC structure benefits from holding lower liquidity and raising deposits at lower costs than a non-MBHC structure, suggesting that MBHCs have enjoyed scant liquidity at the cost of mismatch risk. We find that other member banks also enjoy the benefits of diversified risk when a new entrant joins, suggesting that MBHCs manage liquidity in response to changes in funding liquidity risk. However, internalization is more important for MBHCs that have large numbers of subsidiaries. Whichever types of mergers/acquisitions are chosen by an MBHC, the diversification effect appears. Basel III liquidity regulations would mitigate the mismatch risk at the cost of distorted internal liquidity markets. Journal Article International Review of Financial Analysis 57 77 89 1057-5219 funding liquidity risk, merger and acquisition, bank holding company, Basel III, Net Stable Funding Ratio 31 5 2018 2018-05-31 10.1016/j.irfa.2017.12.011 COLLEGE NANME Accounting and Finance COLLEGE CODE BAF Swansea University 2020-07-15T12:17:37.4747633 2017-12-29T22:36:20.2221955 Faculty of Humanities and Social Sciences School of Management - Accounting and Finance Kim Cuong Ly 0000-0001-5856-4560 1 Katsutoshi Shimizu 2 0037745-17012018100524.pdf 1-s2.0-S105752191730217X-main.pdf 2018-01-17T10:05:24.1500000 Output 366312 application/pdf Accepted Manuscript true 2019-08-10T00:00:00.0000000 © 2018. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/ true eng
title Funding liquidity risk and internal market in the multi-bank holding companies: Diversification or internalization?
spellingShingle Funding liquidity risk and internal market in the multi-bank holding companies: Diversification or internalization?
Kim Cuong Ly
title_short Funding liquidity risk and internal market in the multi-bank holding companies: Diversification or internalization?
title_full Funding liquidity risk and internal market in the multi-bank holding companies: Diversification or internalization?
title_fullStr Funding liquidity risk and internal market in the multi-bank holding companies: Diversification or internalization?
title_full_unstemmed Funding liquidity risk and internal market in the multi-bank holding companies: Diversification or internalization?
title_sort Funding liquidity risk and internal market in the multi-bank holding companies: Diversification or internalization?
author_id_str_mv 06f8b2f66ecfb3ec21bd129e86e3e0ea
author_id_fullname_str_mv 06f8b2f66ecfb3ec21bd129e86e3e0ea_***_Kim Cuong Ly
author Kim Cuong Ly
author2 Kim Cuong Ly
Katsutoshi Shimizu
format Journal article
container_title International Review of Financial Analysis
container_volume 57
container_start_page 77
publishDate 2018
institution Swansea University
issn 1057-5219
doi_str_mv 10.1016/j.irfa.2017.12.011
college_str Faculty of Humanities and Social Sciences
hierarchytype
hierarchy_top_id facultyofhumanitiesandsocialsciences
hierarchy_top_title Faculty of Humanities and Social Sciences
hierarchy_parent_id facultyofhumanitiesandsocialsciences
hierarchy_parent_title Faculty of Humanities and Social Sciences
department_str School of Management - Accounting and Finance{{{_:::_}}}Faculty of Humanities and Social Sciences{{{_:::_}}}School of Management - Accounting and Finance
document_store_str 1
active_str 0
description This study examines how a multi-bank holding company (MBHC) manages funding liquidity risk through its internal liquidity market, how its internal liquidity market works, and the benefits that its member banks enjoy. The results provide evidence that the diversification effect mostly dominates the internalization effect. A new entrant into an MBHC structure benefits from holding lower liquidity and raising deposits at lower costs than a non-MBHC structure, suggesting that MBHCs have enjoyed scant liquidity at the cost of mismatch risk. We find that other member banks also enjoy the benefits of diversified risk when a new entrant joins, suggesting that MBHCs manage liquidity in response to changes in funding liquidity risk. However, internalization is more important for MBHCs that have large numbers of subsidiaries. Whichever types of mergers/acquisitions are chosen by an MBHC, the diversification effect appears. Basel III liquidity regulations would mitigate the mismatch risk at the cost of distorted internal liquidity markets.
published_date 2018-05-31T03:47:34Z
_version_ 1763752284813000704
score 11.016503

Similar Items