Jean-Loup Soula, associate professor at EMSBS, recently published an article in the journal Revue Economique [CNRS cat. 2, HCERES cat. A].
The article, entitled "Technical Optimum of Bank Liquidity Creation", was written in collaboration with Iftekhar Hasan (Fordham University).
Abstract
This paper generates a technical optimum of bank liquidity creation benchmark by tracing an efficient frontier in liquidity creation (bank intermediation) and questions why some banks are more efficient than others in such activities. Evidence reveals that medium size banks are most correlated to efficient frontier. Small (large) banks—focused on traditional banking activities—are found to be the most (least) efficient in creating liquidity in on-balance sheet items whereas large banks—involved in non-traditional activities—are found to be most efficient in off-balance sheet liquidity creation. Additionally, the liquidity efficiency of small banks is more resilient during the 2007-2008 financial crisis relative to other banks.