Home About Latest Browse RSS Advanced Search

Board of Governors of the Federal Reserve System (U.S.)
International Finance Discussion Papers
Internal Liquidity Management and Local Credit Provision
Nicholas Coleman
Ricardo Correa
Leo Feler
Jason Goldrosen
Abstract

This paper studies the patterns of internal liquidity management and their effect on bank lending, using a novel branch-level dataset of Brazilian banks. Our results suggest that internal liquidity management increases during times of financial stress. Privately owned banks are most affected by a liquidity shock, and increase the level of internal funding to maintain their branch lending, while their government-owned competitors react strategically. Private and government banks increase the funding of branches in concentrated and riskier areas. This funding translates into more lending, as the sensitivity of lending to internal funding remains high after the liquidity shock. Altogether, this paper provides branch-level evidence of the way that banks ration internal liquidity, both in normal times and in times of stress, and the effect this has on bank lending.


Download Full text
Cite this item
Nicholas Coleman & Ricardo Correa & Leo Feler & Jason Goldrosen, Internal Liquidity Management and Local Credit Provision, Board of Governors of the Federal Reserve System (U.S.), International Finance Discussion Papers 1204, 01 May 2017.
More from this series
JEL Classification:
Subject headings:
Keywords: Internal liquidity management ; Brazil ; Bank lending
DOI: 10.17016/IFDP.2017.1204
For corrections, contact Ryan Wolfslayer ()
Fed-in-Print is the central catalog of publications within the Federal Reserve System. It is managed and hosted by the Economic Research Division, Federal Reserve Bank of St. Louis.

Privacy Legal