International Journal of Business and Social Science

ISSN 2219-1933 (Print), 2219-6021 (Online) DOI: 10.30845/ijbss

Keeping Funding Costs under Control: Evidence from Bank Bond Issues
Paola Bongini, Arturo Patarnello, Matteo Pelagatti, Monica Rossolini

This paper analyses the development of bank long-term funding at an international level. We consider about 16,000 debt issuances in the period 2006-2012 in Europe and US. We investigate the driving forces that helped banks to weather the storm during the financial crisis with a relatively stable cost of long term funding. Through the use of a Principal Component Analysis we represent bank business model and we show that different orientation towards the Originate-To-Hold (OTH) or the Originate-To-Distribute (OTD) business models had subsequently, during crisis times, diverse impact on the variability or stability of the cost of long-term funds. We document the relevance of the OTH bank business model in keeping these costs under control and to be a sustainable business model in crisis times

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