Theoretical and empirical analyses on asset encumbrance show that its implications on banks' funding structure are considerable and might compromise their resilience to liquidity shocks. For this reason, asset encumbrance gained the attention of supervisors and policymakers, especially after the Global Financial Crisis. This thesis aims to shed light on the drivers of asset encumbrance providing an empirical analysis performed on the European banks belonging to the Single Supervisory Mechanism during the 2014:Q4 - 2019:Q2 period. Our investigation covers several factors such as the credit risk induced by non-performing assets, the availability of central bank eligible collateral, the stability of the funding structure, capitalization.