New Study Finds Insignificant Difference in Funding Costs for Largest Banks

New Study Finds Insignificant Difference in Funding Costs for Largest Banks

An independent research report, commissioned by The Clearing House Association, and authored by a leading global management consulting firm Oliver Wyman, found that money market deposit rate advantages for the largest banks were just four basis points at the end of 2012. Further, the study found evidence that this small difference may not be attributable to TBTF perceptions – that is, potential perceptions among market participants that the government would intervene to prevent the failure of a large financial institution.

The study is among the first to examine funding costs up to 2012, thus capturing the period following the sweeping post-crisis regulatory changes that have directly targeted TBTF concerns. By contrast, most other studies have examined historical data over the last 10-20 years, up to 2010.

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The views expressed do not necessarily reflect those of the Bank Policy Institute’s member banks, and are not intended to be, and should not be construed as, legal advice of any kind.