Bank competition and resilience to liquidity shocks
We investigate the relationship between bank competition and banks’ resilience to liquidity shocks. Exploiting changes in bank competition resulting from U.S. deregulation, we find that banks proactively increase their liquidity holdings after bank market becomes more competitive, which bolsters banks’ resilience to liquidity shocks. We argue that heightened bank competition amplifies the potential liquidity risk associated with similar liabilities, thereby necessitating banks improving their resilience to liquidity shocks.
Authors
- Chengsi Zhang (ORCID: https://orcid.org/0000-0003-0532-8657)
- Haiyang Tu (ORCID: https://orcid.org/0000-0001-6161-4987)
- Zehao Liu (ORCID: https://orcid.org/0000-0002-1510-4844)
- Xinghan Yin (ORCID: https://orcid.org/0009-0000-6761-8903)
Institutions
- China Aluminum International Engineering Corporation Limited (China) (CN)
- Renmin University of China (CN)
Publication Details
- Journal
- International Review of Economics & Finance
- Published
- 2025-06-11
- DOI
- https://doi.org/10.1016/j.iref.2025.104210
- Citations
- 3
- Primary Topic
- Banking stability, regulation, efficiency
- Type
- article
- Field-Weighted Citation Impact
- 6.62
Funders
- National Natural Science Foundation of China