Advertisement

IMF Economic Review

, Volume 63, Issue 3, pp 542–567 | Cite as

International Banking and Liquidity Risk Transmission: Evidence from Ireland

  • Mary Everett
  • Jane Kelly
  • Fergal Mccann
Article

Abstract

The increased international expansion of Irish banks, combined with entry into the domestic market by a number of foreign competitors makes Ireland a pertinent country for studying the international transmission of liquidity risk. Using bank-level panel data and novel data on access to central bank liquidity and Exceptional Liquidity Assistance, regression analysis confirms a risk-absorbing effect, whereby official liquidity helped mitigate the effect of liquidity risk on domestic lending by larger Irish banks. Regression analysis also confirms that a larger net borrowing position vis-à-vis foreign affiliates insulates the effect of liquidity risk on domestic lending, suggesting that banks’ internal capital markets can provide a counterweight to systemic risks.

JEL Classifications

E44 F36 G32 

Supplementary material

41308_2015_BFimfer201521_MOESM1_ESM.7z (3.2 mb)
Supplementary material, approximately 3315 KB.

References

  1. Buch, Claudia M. and Linda Goldberg, 2014, “International Banking and Liquidity Risk Management: Lessons from Across Countries,” Working Paper 20286 (Cambridge, MA: National Bureau of Economic Research).Google Scholar
  2. Cerutti, E., A. Ilyina, Y. Makarova, and C. Schmieder, 2010, “Bankers Without Borders? Implications of Ring-Fencing for European Cross-Border Banks,” Chapter in SUERF Studies, SUERF—The European Money and Finance Forum, ed. by P. Backé, E. Gnan, and P. Hartmann.Google Scholar
  3. Cornett, M., J. McNutt, P. Strahan, and H. Tehranian, 2011, “Liquidity Risk Management and Credit Supply in the Financial Crisis,” Journal of Financial Economics, Vol. 101, No. 2): pp. 297–312.CrossRefGoogle Scholar
  4. Laeven, L. and F. Valencia, 2012, “Systemic Banking Crises Database: An Update,” IMF Working Papers 12/163 (International Monetary Fund).Google Scholar

Copyright information

© International Monetary Fund 2015

Authors and Affiliations

  • Mary Everett
  • Jane Kelly
  • Fergal Mccann

There are no affiliations available

Personalised recommendations