Wholesale funding and liquidity creation

Abstract We examine the relationship between wholesale funding and liquidity creation using a sample of 825 banks in 84 countries during post-crisis period 2010–2020. find that asset-side is consistently negatively associated with short-term funding, but not long-term funding. Our results suggest significantly driven by negative illiquid lending. Moreover, our show positively moderated asset risk, suggesting presence moral hazard incentives. are robust to series tests have important implications for bank regulation.