Has the Stabilizing Nature of Deposits Changed after the Crisis? Impact of Funding Structure on Bank's Risk

• Authors: Marta Penczar , Lech Kujawski , Monika Liszewska

Abstracts

EN

Theoretical background: The global financial crisis (GFC) has shown the importance of the funding model for the bank’s stability. In this context, deposits were of particular importance as they proved to be a stable source of funding during market turmoil. As a result, many banks have changed the funding model, paying greater attention to financing obtained on the deposits market. Purpose of the article: In this paper, we analyze the impact of funding models on the EU banks’ risk after GFC, i.e. in 2011–2018. We put particular emphasis on the funding structure measured by the deposits to total assets ratio and changes that take place according to the type of institution (i.e. listing status, specialization, and funding model). Research methods: In our research, we use panel data models together with a set of tests that allow us to deduce about properties of proposed models and allow us to analyze the significance of the impact of the bank-specific, macroeconomic, and dummy variables on the bank’s risk. We apply “within”, “fixed time effects” estimator from plm R package. Main findings: We confirm the stabilizing function of deposits, but also the non-linear nature of the impact of the funding structure on the bank’s stability, depending on the bank’s specialization. This means that the stabilizing role of deposits for the bank’s stability is just as important in the post-crisis period as it was during the outbreak of GFC in 2008, although the excessive growth of deposits in some types of banks may, however, lead to an increase in the risk level.

Keywords

EN

bank's risk; funding structure; deposits

• Publisher: Wydawnictwo Uniwersytetu Marii Curie-Skłodowskiej
• Journal: Annales Universitatis Mariae Curie-Skłodowska, sectio H – Oeconomia
• Year: 2022
• Volume: 56
• Issue: 5
• Pages: 185-205

Dates

published

2022

Contributors

author

Marta Penczar

• University of Gdańsk, Faculty of Management

• https://orcid.org/0000000235641460

author

Lech Kujawski

• University of Gdańsk, Faculty of Management

• https://orcid.org/0000000157381180

author

Monika Liszewska

• https://orcid.org/000000027714602X

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Identifiers

DOI

10.17951/h.2022.56.5.185-205

Biblioteka Nauki

2191611