Oussama LABCHARA  will publicly defend his PhD Thesis, entitled “Essays on bank liquidity management during distress times” on June 8, 2023 at 2.30 pm (Room Salle des Actes).

Supervisors: A. Tarazi & I. Distinguin

Abstract

This thesis analyzes changes in bank liquidity management during distress times and evaluates the implications for risk-taking and lending. In the first chapter, we study the changes in European banks’ liquidity management during the 2008 global financial crisis and the 2010-2012 European sovereign debt crisis. Our results show that banks manage their liquidity positions more efficiently during the two financial crises by setting lower liquidity targets and adjusting faster toward the targets than in normal times. Furthermore, banks improve their liquidity positions via different balance sheet mechanisms during normal times and each of the two financial crises. The second chapter studies the impact of negative liquidity shocks on banks’ risk-taking behavior. We find that negative liquidity shocks incentivize banks to take less risk. Indeed, banks decrease their default and credit risks when they experience negative liquidity shocks. The third chapter examines banks’ lending in response to negative liquidity shocks. Our findings reveal that banks reduce lending when they face negative liquidity shocks. Furthermore, banks tend to decrease lending when they experience negative funding shocks despite decreasing liquid asset holdings.