Bank ownership type and temporal evolution of long‐term bank funding in the period 2005-2017

This study uses a large panel dataset of Western European banks to examine the determinants of bank funding stability. Banks are divided into three categories by bank ownership type; the ownership types in this study are commercial banks, cooperative banks and savings banks. Three sources of stable bank funding are investigated: customer deposits, equity, and long-term liabilities. Furthermore, the sum of these funding components is used as a proxy variable for a bank's total available stable funding (ASF). A special focus is on the temporal evolution of these funding types. The regression results show that commercial banks’ funding became much more stable in the period 2005–2017. However, that funding remains, on average, less stable than does cooperative and savings banks’ funding. In addition, funding stability has remained at the pre-crisis level in cooperative and savings banks, despite a steep dip in cooperative banks’ ASF during the sovereign debt crisis. Furthermore, banks substantially decreased financing from long-term liabilities after the financial crisis, replacing it with customer deposits and equity.©2020 Wiley. This is the peer reviewed version of the following article: Meriläinen, J.-M. (2020). Bank ownership type and temporal evolution of long‐term bank funding in the period 2005-2017. Annals of Public and Cooperative Economics 91(2), 237-268, which has been published in final form at https://doi.org/10.1111/apce.12266. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions.I would like to thank two anonymous referees for their effort and valuable comments. This work was carried out with funding from the OP-Group Research Foundation, Savings Banks Research Foundation, Foundation for Economic Education, and Evald and Hilda Nissi Foundation.fi=vertaisarvioitu|en=peerReviewed