Bank Liquidity Creation and Financial Crises delivers a consistent, logical presentation of bank liquidity creation and addresses questions of research and policy interest that can be easily understood by readers with no advanced or specialized industry knowledge.
Authors Allen Berger and Christa Bouwman examine ways to measure bank liquidity creation, how much liquidity banks create in different countries, the effects of monetary policy (including interest rate policy, lender of last resort, and quantitative easing), the effects of capital, the effects of regulatory interventions, the effects of bailouts, and much more. They also analyze bank liquidity creation in the US over the past three decades during both normal times and financial crises.
Narrowing the gap between the "academic world" (focused on theories) and the "practitioner world" (dedicated to solving real-world problems), this book is a helpful new tool for evaluating a bank’s performance over time and comparing it to its peer group.
- Explains that bank liquidity creation is a more comprehensive measure of a bank’s output than traditional measures and can also be used to measure bank liquidity
- Describes how high levels of bank liquidity creation may cause or predict future financial crises
- Addresses questions of research and policy interest related to bank liquidity creation around the world and provides links to websites with data and other materials to address these questions
- Includes such hot-button topics as the effects of monetary policy (including interest rate policy, lender of last resort, and quantitative easing), the effects of capital, the effects of regulatory interventions, and the effects of bailouts
Upper-division undergraduates, graduate students, and professionals worldwide working in banking, financial intermediation, and regulation, especially in respect to financial crises
- Part I: Introductory Materials
- Chapter 1: Introduction
- 1.1. The focus of the book
- 1.2. Liquidity creation theories
- 1.3. Understanding financial statements
- 1.4. Measurement of bank liquidity creation
- 1.5. Using liquidity creation to measure bank output
- 1.6. Using liquidity creation to measure bank liquidity
- 1.7. Defining and dating financial crises
- 1.8. How much liquidity do banks create during normal times and financial crises?
- 1.9. The links between bank liquidity creation and future financial crises
- 1.10. Do better capitalized banks create more or less liquidity?
- 1.11. Which banks create the most and least liquidity?
- 1.12. How do government policies and actions affect bank liquidity creation during normal times and financial crises?
- 1.13. Bank liquidity creation: value, performance, and persistence
- 1.14. How can bank executives, financial analysts, researchers (including academics and students), and policy makers (including legislators, regulators, and central bankers) use bank liquidity creation data to their advantages?
- 1.15. Where we stand now and the open research and policy questions
- 1.16. Links to websites containing data, documents, and other information useful for US bank performance benchmarking, research, and policy work
- 1.17. Summary
- Chapter 2: Liquidity Creation Theories
- 2.1. Liquidity creation on the balance sheet
- 2.2. Liquidity creation off the balance sheet
- 2.3. Liquidity created by other types of financial institutions and markets
- 2.4. Summary
- Chapter 1: Introduction
- No. of pages:
- © Academic Press 2016
- 1st November 2015
- Academic Press
- eBook ISBN:
- Hardcover ISBN:
Allen N. Berger is the H. Montague Osteen, Jr., Professor in Banking and Finance and Ph.D. coordinator of the Finance Department, Moore School of Business, and Carolina Distinguished Professor, University of South Carolina; Senior Fellow, Wharton Financial Institutions Center; Fellow, European Banking Center; and Secretary/Treasurer, Financial Intermediation Research Society. He also currently serves on the editorial boards of six professional finance journals. In addition, Professor Berger is past editor of the Journal of Money, Credit, and Banking and has co-edited six special issues of various professional journals and both editions of the Oxford Handbook of Banking. His research covers a variety of topics related to financial institutions. He is co-author of Bank Liquidity Creation and Financial Crises (Elsevier). He has published over 100 professional articles in refereed journals, including papers in top finance journals, Journal of Finance, Journal of Financial Economics, Review of Financial Studies, and Journal of Financial and Quantitative Analysis; top economics journals, Journal of Political Economy, American Economic Review, and Journal of Monetary Economics; and other top professional business journals, Managerial Science and Journal of Business; and over 30 other non-refereed publications. Professor Berger was Senior Economist from 1989 to 2008 and Economist from 1982-1989 at the Board of Governors of the Federal Reserve System. He received a Ph.D. in Economics from the University of California, Berkeley in 1983, and a B.A. in Economics from Northwestern University in 1976.
Moore School of Business, University of South Carolina, Columbia, SC, USA
Christa H.S. Bouwman is Associate Professor of Finance and RepublicBank Research Fellow at Mays Business School at Texas A&M University; Fellow of the Wharton Financial Institutions Center; and a Research Associate at the Federal Reserve Bank of Cleveland. She was Associate Professor of Banking & Finance at Case Western Reserve University, where she also held the Lewis-Progressive Chair; Visiting Assistant Professor of Finance at MIT’s Sloan School of Management; and Visiting Scholar at the Federal Reserve Bank of Boston. Professor Bouwman’s research interests are in Financial Intermediation and Corporate Finance. She is an Associate Editor at three journals. Her research papers have been published in the Journal of Financial Economics, Review of Financial Studies, Journal of Banking & Finance, MIT / Sloan Management Review, and Oxford Handbook of Banking. She is co-author of Bank Liquidity Creation and Financial Crises (Elsevier). Professor Bouwman worked for five years at ABN AMRO Bank and as a part-time litigative consultant for the U.S. Department of Justice. She has been nominated for numerous undergraduate and MBA Excellence in Teaching awards. She received a Ph.D. in Finance from the University of Michigan in 2005, an MBA from Cornell University in 1993, and a B.A./M.A. in Economics and Business (cum laude) from the University of Groningen – the Netherlands in 1993..
Texas A&M University, College Station, TX, and Wharton Financial Institutions Center, Philadelphia, PA, USA
"A key economic function of banks is to create liquidity in the economy, financing illiquid assets with liquid labilities and enhancing overall funding of investment projects in the economy. Knowing how to measure how much liquidity is being created at any point in time is of central importance for economists, policymakers and bankers. This book, based on the path-breaking empirical measure for bank liquidity creation developed by the authors in their earlier published research, provides an exhaustive and enlightening discussion of the variety of interesting issues related to bank liquidity creation, including its implications for bank stability and regulation. A must read!" --Anjan Thakor, Washington University in St. Louis
"This text provides an excellent insight into the features of banks and the dynamics of financial intermediation. The authors provide terrific coverage of the liquidity creation process and how financial crises inhibit such activity. This is an essential guide for all students of banking and financial system behavior." --Philip Molyneux, Bangor University