A macroprudential approach to address liquidity risk with the loan-to-deposit ratio |
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Authors: | Jan Willem Van den End |
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Institution: | Economics and Research Division, De Nederlandsche Bank, P.O. Box 98, 1000 AB Amsterdam, The Netherlands |
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Abstract: | This paper maps the empirical features of the loan-to-deposit (LTD) ratio with an eye on using it in macroprudential policy to mitigate liquidity risk. We examine the LTD trends and cycles of 11 euro area countries by filtering methods and analyse the interaction between loans and deposits. We propose macroprudential policy to prevent an unsustainable level of the LTD ratio and policy measures to counter destabilizing cyclical developments. |
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Keywords: | financial stability banks liquidity regulation |
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