Bank Funding, Liquidity, and Capital Adequacy

Bank Funding, Liquidity, and Capital Adequacy

A Law and Finance Approach

Elgar Financial Law series

José Gabilondo

Focusing primarily on the banking system in the United States, this book offers an innovative framework that integrates a depository bank’s liquidity and its capital adequacy into a unified notion of funding that helps to explain how the 2007–2008 crisis unfolded, why central banks succeeded in resolving the crisis, and how the conceptual legacy of the crisis and its resolution led to lasting changes in bank funding regulation, including new objective requirements for bank liquidity. To provide a comparative context, the book also examines the funding models of non-bank intermediaries like dealer banks and insurers.

Appendix: A case study

José Gabilondo

Subjects: law - academic, commercial law, corporate law and governance, finance and banking law, regulation and governance

Abstract

This case study uses a series of pro forma balance sheets to trace the financial transformations of a hypothetical commercial bank – Acme – as it faces routine funding challenges. Though somewhat technical, the discussion provides many concrete examples of ideas covered by previous chapters.

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