Bank Liquidity and the Global Financial Crisis: The Causes and Implications of Regulatory Reform

The Global Financial Crisis of 2007–9 highlighted the importance of liquidity risk in banks, leading to regulatory reform and the introduction of uniform international rules and best practices. This book provides a comprehensive understanding of the bank liquidity crisis and its implications, with funding from Università Cattolica del Sacro Cuore.

Format: Paperback / softback
Length: 200 pages
Publication date: 03 January 2019
Publisher: Springer Nature Switzerland AG

One of the crucial takeaways from the Global Financial Crisis (GFC) of 2007-9 is that minimum capital requirements alone are insufficient to ensure the stability of intermediaries. Despite the high levels of capitalization observed in many banks prior to the crisis, they too faced significant challenges due to inadequate liquidity buffers. Consequently, regulators for the first time recognized that liquidity risk could pose a threat to the orderly functioning and even survival of banks. Prior to the GFC, liquidity risk did not receive the same level of attention from international regulators as other types of risks such as credit, market, and operational risks.

The GFC brought about significant changes in the regulatory landscape, elevating liquidity risk to a prominent position in regulatory reform. This led to the introduction of uniform international rules and best practices aimed at mitigating liquidity risks. The literature has extensively examined the potential impacts of these new liquidity regulations on banks, the financial system, and the broader economy.

This book offers a comprehensive analysis of the bank liquidity crisis that unfolded during the GFC, as well as the liquidity regulatory reforms introduced by the Basel Committee through the Basel III Accord. It delves into the implications of these reforms at both the micro and macroeconomic levels.

The research project was funded in part by Università Cattolica del Sacro Cuore, contributing to its publication.

Weight: 181g
Dimension: 279 x 210 x 3 (mm)
ISBN-13: 9783030068448
Edition number: Softcover reprint of the original 1st ed. 2018