Bank funding costs during the COVID-19 pandemic: Evidence from China
Pacific Basin Finance Journal
; 79, 2023.
Article
in English
| Scopus | ID: covidwho-2295326
ABSTRACT
This paper investigates whether and how the COVID-19 pandemic affects bank funding costs in China. We find a significantly positive relationship between the offering yield spreads of negotiable certificates of deposit and banks' pandemic exposure. The surge in bank funding costs is alleviated by banks' asset quality, financial flexibility, operational resilience, and government support, indicating that pandemic-induced risks are priced in the interbank market. The alternative explanations of monetary policy interventions, investors' flight-to-liquidity effect, bank liquidity hoarding, and banks' mispricing are further excluded. We contribute to the literature on the pandemic effects on financial markets, and bank funding during crises. © 2023 Elsevier B.V.
Full text:
Available
Collection:
Databases of international organizations
Database:
Scopus
Language:
English
Journal:
Pacific Basin Finance Journal
Year:
2023
Document Type:
Article
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