Noncore Bank Liabilities and Financial Vulnerability

Joon Ho Hahm, Hyun Song Shin, Kwanho Shin

Research output: Contribution to journalArticlepeer-review

79 Citations (Scopus)

Abstract

A lending boom is reflected in the composition of bank liabilities when traditional retail deposits (core liabilities) cannot keep pace with asset growth and banks turn to other funding sources (noncore liabilities) to finance their lending. We formulate a model of credit supply as the flip side of a credit risk model where a large stock of noncore liabilities serves as an indicator of the erosion of risk premiums and hence of vulnerability to a crisis. We find supporting empirical evidence in a panel probit study of emerging and developing economies.

Original languageEnglish
Pages (from-to)3-36
Number of pages34
JournalJournal of Money, Credit and Banking
Volume45
Issue numberSUPPL 1
DOIs
Publication statusPublished - 2013 Aug

Keywords

  • Credit booms
  • Cross-border banking
  • Currency crises

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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