Ouarda Merrouche's Books

The Transmission of Liquidity Shocks

The Role of Internal Capital Markets and Bank Funding Strategies

By: Mr.Philippe D Karam,Ouarda Merrouche,Moez Souissi,Rima Turk

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The Transmission of Liquidity Shocks

The Role of Internal Capital Markets and Bank Funding Strategies

By: Mr.Philippe D Karam,Ouarda Merrouche,Moez Souissi,Rima Turk

We analyze the transmission of bank-specific liquidity shocks triggered by a credit rating downgrade through the lending channel. Using bank-level data for US Bank Holding Companies, we find that a credit rating downgrade is associated with an immediate and persistent decline in access to non-core deposits and wholesale funding, especially during the global financial crisis. This translates into a reduction in lending to households and non-financial corporates at home and abroad. The effect on domestic lending, however, is mitigated when banks (i) hold a larger buffer of liquid assets, (ii) diversify away from rating-sensitive sources of funding, and (iii) activate internal liquidity support measures. Foreign lending is significantly reduced during a crisis at home only for subsidiaries with weak funding self-sufficiency.

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International Monetary Fund

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ISBN 10

1498348394

ISBN 13

9781498348393

What Caused the Global Financial Crisis

Evidenceon the Drivers of Financial Imbalances 1999: 2007

By: Erlend Nier,Ouarda Merrouche

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What Caused the Global Financial Crisis

Evidenceon the Drivers of Financial Imbalances 1999: 2007

By: Erlend Nier,Ouarda Merrouche

This paper investigates empirically the drivers of financial imbalances ahead of the global financial crisis. Three factors may have contributed to the build-up of financial imbalances: (i) rising global imbalances (capital flows), (ii) monetary policy that might have been too loose, (iii) inadequate supervision and regulation. Panel data regressions are performed for OECD countries from 1999 to 2007, so as to shed light on the relative importance of these factors, as well as the extent to which these factors might have interacted in fuelling the build-up. We find that the build-up of financial imbalances was driven by capital inflows and an associated compression of the spread between long and short rates. The effect of capital inflows on the build-up is amplified where the supervisory and regulatory environment was relatively weak. We find that, by contrast, differences in monetary policy cannot account for differences across countries in the build-up of financial imbalances ahead of the crisis.

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International Monetary Fund

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ISBN 10

1455210722

ISBN 13

9781455210725

Bank Capital

Lessons From the Financial Crisis

By: Ouarda Merrouche,Ms.Enrica Detragiache,Asli Demirgüç-Kunt

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Bank Capital

Lessons From the Financial Crisis

By: Ouarda Merrouche,Ms.Enrica Detragiache,Asli Demirgüç-Kunt

Using a multi-country panel of banks, we study whether better capitalized banks experienced higher stock returns during the financial crisis. We differentiate among various types of capital ratios: the Basel risk-adjusted ratio; the leverage ratio; the Tier I and Tier II ratios; and the tangible equity ratio. We find several results: (i) before the crisis, differences in capital did not have much impact on stock returns; (ii) during the crisis, a stronger capital position was associated with better stock market performance, most markedly for larger banks; (iii) the relationship between stock returns and capital is stronger when capital is measured by the leverage ratio rather than the risk-adjusted capital ratio; (iv) higher quality forms of capital, such as Tier 1 capital and tangible common equity, were more relevant.

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