We provide a model that links an asset's market liquidity - i.e., the ease with which it is traded - and traders' funding liquidity - i.e., the ease with which they can obtain funding. Traders provide market liquidity, and their ability to do so depends on their availability of funding....

This paper looks at why bank consolidation has been taking place in the United States and what the structure of the banking industry might look like in the future. It then discusses the implications of bank consolidation for the economy and the challenge it poses for central bankers.

Foreign bank entry is frequently associated with spillover effects for local banks and increasing competition in the local banking market. We study the impact of these effects on host countries. In particular, we ask how these effects interact and how they depend on the competitive environment...

Since the late eighties, the Spanish banking system has been undergoing major changes that have affected both its structure and the nature of strategic interaction among banking institutions. Various different strategies have been adopted to tackle the deamds of this new operating environment,...

Two alternative funding modes for a commercial bank are compared, deposits and securitization. Our model includes the two-sided asymmetric information setup of Diamond and Dybvig (1983) and Jacklin and Bhattacharya (1988) and a dynamic aspect with the introduction of a valuable new investment...

Evaluating credit risk is an important task for financial institution managers. In order to measure the risk pertaining to the borrower, these institutions often use a rating system to establish the credit risk. In this study, a multicriterion approach was chosen to elaborate a rating system for...

Evaluating credit risk is an important task for financial institution managers. In order to measure the risk pertaining to the borrower, these institutions often use a rating system to establish the credit risk. In this study, a multicriterion approach was chosen to elaborate a rating system for...

This paper investigates the evolution of the (conditional) volatility of returns on three Scandinavian markets (Finland, Norway and Sweden) over the turbulent period of the past decade, namely the overlapping periods of financial liberalisation, drastically changing macroeconomic conditions and...

We consider the joint effect of competition and deposit insurance on risk taking by banks when the riskiness of banks is unobservable to depositors. It turns out that the magnitude of risk taking depends on the type of bank competition. If the bank is a monopoly or banks compete only in the loan...

Is commercial banking in the traditional sense obsolete? Are we in fact witnessing the emergence of a fundamentally new era of finance and payments intermediation? These questions are raised in this paper. Instead of a formal analysis, an attempt is made here to approach these questions from a...