Leverage, balance-sheet size and wholesale funding

Uncertainty and bank wholesale funding

In this paper we relate a bank’s choice between retail and wholesale liabilities to real economic uncertainty and the resulting volatility of bank loan volumes. We argue that since the volume of retail deposits is slow and costly to adjust to shocks in the volume of bank assets, banks facing more intense uncertainty and more volatile loan demand tend to employ more wholesale liabilities rather ...

Comparing Securitized and Balance Sheet Loans: Size Matters

Do securitized loans differ from loans held on lenders’ balance sheets? If so, why? We assemble a unique dataset of commercial mortgages with information on loan characteristics at origination and subsequent performance. The most significant difference between securitized (CMBS) and balance sheet loans is the loan size. The largest loans are 42 percentage points more likely to be securitized th...

Balance Sheet

The Technology Balance Sheet

Just as it is essential to understand an organization's financial health, it is equally necessary to understand and measure its technological health. The first section of the chapter describes the technology balance sheet, a useful approach to measuring a company's technology. The second section presents a number of classic technology-related flaws, ranging from requiring infinite technology (i...

Bank Size, Leverage, and Financial Downturns

I construct a macroeconomic model with a financial sector in which the severity of financial downturns depends on size differences in the banking sector and average bank leverage. In my model, a more concentrated banking sector deepens and prolongs financial downturns for two reasons: returns on assets decrease more, and banks sharply decrease the liquidity supply in the interbank market. Calib...