The dark side of liquidity regulation: Bank opacity and funding liquidity risk

• Published in: Journal of financial intermediation Vol. 52; p. 100990
• Main Authors: Raz, Arisyi F., McGowan, Danny, Zhao, Tianshu
• Format: Journal Article
• Language: English
• Published: Elsevier Inc 01.10.2022
• Subjects: Bank opacity; Funding liquidity risk; Liquidity coverage ratio; E58; G28; Funding liquidity risk; Liquidity coverage ratio; Bank opacity; G21

We evaluate how the liquidity coverage rule affects US banks’ opacity and funding liquidity risk. Banks subject to the rule become significantly more opaque and funding liquidity risk increases by $245 million per quarter. Higher funding liquidity risk is more pronounced among banks that are subject...