Rancan, M., Cariboni, J., Keasey, K. orcid.org/0000-0001-7645-3274 et al. (1 more author) (2023) Bond issuance and the funding choices of European banks: The consequences of public debt. Journal of Empirical Finance, 74. 101417. ISSN 0927-5398
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.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2023 The Author(s). Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/). |
Keywords: | Bank bonds; Sovereign debt; European banks; Regulation |
Dates: |
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Institution: | The University of Leeds |
Academic Units: | The University of Leeds > Faculty of Business (Leeds) > Accounting & Finance Division (LUBS) (Leeds) |
Depositing User: | Symplectic Publications |
Date Deposited: | 21 Dec 2023 11:34 |
Last Modified: | 21 Dec 2023 11:34 |
Status: | Published |
Publisher: | Elsevier |
Identification Number: | 10.1016/j.jempfin.2023.101417 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:206846 |
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