Corpus ID: 158180940

The Impact of LIBOR Linked Borrowing to Cover Venture Bank Investment Loans Creates a New Systemic Risk

@article{Hanley2019TheIO,
  title={The Impact of LIBOR Linked Borrowing to Cover Venture Bank Investment Loans Creates a New Systemic Risk},
  author={B. Hanley},
  journal={arXiv: Risk Management},
  year={2019}
}
  • B. Hanley
  • Published 2019
  • Business, Economics
  • arXiv: Risk Management
A scenario in which regulators take the drastic step of requiring coverage of all venture bank investment loans using interbank borrowed funds is considered. In this scenario, a minimal amount of default insurance is used, such that Tier 1 and 2 capital requirements are still met. To do this, the default insurance percentage on all investment loans is cut to 3.88%, although the minimum is 2.88%. Results: For a portfolio of 1.31X (ten year total conventional return) or better, at interest rates… Expand

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