Michela Rancan
Bond Issuance and the Funding Choices of European Banks: The Consequences of Public Debt
Rancan, Michela; Cariboni, Jessica; Keasey, Kevin; Vallascas, Francesco
Authors
Jessica Cariboni
Kevin Keasey
Professor Francesco Vallascas francesco.vallascas@durham.ac.uk
Professor
Abstract
European banks raise less funds in the bond market when there is a larger public debt in their national economies and this is reflected in lower leverage. We exploit numerous sources of heterogeneity in our data to demonstrate this result is driven by a crowding out effect from the public arena and not by a sovereign risk channel or political influence. The crowding out effect is stronger for less internationally active or smaller banks, and in banks characterized by more traditional business models. Our findings indicate that additional capital requirements on sovereign bond holdings can also influence bank funding composition via a decrease in the demand for sovereign bonds by the banking industry. The specific effect of these regulatory initiatives is critically dependent on bank characteristics.
Citation
Rancan, M., Cariboni, J., Keasey, K., & Vallascas, F. (2023). Bond Issuance and the Funding Choices of European Banks: The Consequences of Public Debt. Journal of Empirical Finance, 74, Article 101417. https://doi.org/10.1016/j.jempfin.2023.101417
Journal Article Type | Article |
---|---|
Acceptance Date | Aug 28, 2023 |
Online Publication Date | Aug 31, 2023 |
Publication Date | 2023-12 |
Deposit Date | Sep 4, 2023 |
Publicly Available Date | Sep 4, 2023 |
Journal | Journal of Empirical Finance |
Print ISSN | 0927-5398 |
Electronic ISSN | 1879-1727 |
Publisher | Elsevier |
Peer Reviewed | Peer Reviewed |
Volume | 74 |
Article Number | 101417 |
DOI | https://doi.org/10.1016/j.jempfin.2023.101417 |
Public URL | https://durham-repository.worktribe.com/output/1728897 |
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© 2023 The Author(s). Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license
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Publisher Licence URL
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Copyright Statement
© 2023 Published by Elsevier B.V
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