Does the Expansion of Interbank Business Diminish the Liquidity of Banks in China?
- 1 Jinan University, Guangzhou, China
Abstract
The interbank business gradually becomes one of the main businesses of a bank. The interbank business has great influence on the liquidity of banks. This article makes use of the panel data of twenty-three different types of business banks from 2009 to 2015 to analyze the relationship between interbank business and the liquidity of banks and the factors that affect the bank liquidity. The results show that the interbank business affects the liquidity of banks through three impact paths which are maturity mismatch, the allocation of funds and meaningless capital turnover. Besides, the relationship between the interbank business and bank liquidity is negative, and the expansion of interbank business would result in the decrease of liquidity level.
- Calvo, G. A., & Reinhart, C. M. (1999). Capital Flow Reversals, the Exchange Rate Debate, and Dollarization. MPRA Paper, 36, 13-15.
- Diamond, D. W., & Philip, H. D. (1983). Bank Runs, Deposit Insurance, and Liquidity. Journal of Political Economy, 91, 401-419.
- Ercegovac, R., & Kundid, A. (2011). Interbank Deposit Market Relevance for Croatian Banking System Sustainability. Economic Review, 62, No. 1.
- Freixas, X., & Parigi, B. M. (2000). Jean-Charles Rochet Systemic Risk, Interbank Relations, and Liquidity Provision by the Central Bank. Journal of Money, Credit, Banking, 32, 611-638. https://doi.org/10.2307/2601198
- Friedman, M., & Schwartz, A. J. (1986). The Failure of the Bank of United States: A Reappraisal: A Reply. Explorations in Economic History, 23, 199-204. https://doi.org/10.1016/0014-4983(86)90013-6
- Gabriele, T., Amin, M., Mauro, G., & Dirk, H. (2013). Bankruptcy Cascades in Interbank Markets. PLoS ONE, 7, No. 12.
- Georg, C. P. (2013). The Effect of Interbank Network Structure on Contagion and Common Shocks. Journal of Banking & Finance, 37, 2216-2228. https://doi.org/10.1016/j.jbankfin.2013.02.032
- He Yujie, Zhai Guangyu, & Sun Xiaoxia. 翟光宇, 何玉洁, 孙晓霞. (2015). The Expansion of Chinese Interbank Business and the Risk of Banks—A Empirical Analysis Based on the Data of 2007-2013 中国上市银行同业业务扩张与银行风险—基于2007-2013年季度数据的实证分析. Review of Investment Studies, 2, 34-45.
- Ramamurti, R. (2012). What Is Really Different about Emerging Market Multinationals? Global Strategy Journal, 2, 41-47. https://doi.org/10.1002/gsj.1025
- Wang Peng. 王鹏. (2013). The Business Model of Interbank Business 商业银行同业业务发展模式比较研究. South Finance Issues, 12, 103-105.
- Wang Xiangyun. 王祥云. (2016). The Risk Study of Interbank Business and Wealth Management Business银行同业和理财业务流动性风险问题探究. Finance and Economics, 14, 70-72.