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Understanding the weakness of bank lending

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Author Info

  • Bell, Venetia

    ()
    (Bank of England)

  • Young, Garry

    ()
    (Bank of England)

Abstract

The flow of new bank lending to UK households and businesses fell sharply following the start of the global financial crisis in mid-2007. That provoked an ongoing debate about the extent to which the sustained weakening of bank lending was caused by a fall in demand for credit, or a fall in supply. While it is difficult to disentangle the effects of shifts in credit demand and supply, this article finds evidence of a substantial and persistent tightening in credit supply conditions from mid-2007. But independently weaker credit demand — probably associated with the impact of the global financial crisis — is also likely to have contributed to the weakness in bank lending.

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File URL: http://www.bankofengland.co.uk/publications/quarterlybulletin/qb100406.pdf
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Bibliographic Info

Article provided by Bank of England in its journal Bank of England Quarterly Bulletin.

Volume (Year): 50 (2010)
Issue (Month): 4 ()
Pages: 311-320

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Handle: RePEc:boe:qbullt:0035

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  1. Gilchrist, Simon & Yankov, Vladimir & Zakrajsek, Egon, 2009. "Credit market shocks and economic fluctuations: Evidence from corporate bond and stock markets," Journal of Monetary Economics, Elsevier, vol. 56(4), pages 471-493, May.
  2. Button, Richard & Pezzini, Silvia & Rossiter, Neil, 2010. "Understanding the price of new lending to households," Bank of England Quarterly Bulletin, Bank of England, vol. 50(3), pages 172-182.
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Cited by:
  1. Butt, Nicholas & Domit, Silvia & McLeay, Michael & Thomas, Ryland & Kirkham, Lewis, 2012. "What can the money data tell us about the impact of QE?," Bank of England Quarterly Bulletin, Bank of England, vol. 52(4), pages 321-331.
  2. Mawuli Segnon & Thomas Lux, 2013. "Multifractal Models in Finance: Their Origin, Propterties, and Applications," Kiel Working Papers 1860, Kiel Institute for the World Economy.
  3. Bunn, Philip & Le Roux, Jeanne & Johnson, Robert & McLeay, Michael, 2012. "Influences on household spending: evidence from the 2012 NMG Consulting survey," Bank of England Quarterly Bulletin, Bank of England, vol. 52(4), pages 332-342.
  4. David Cobham & Yue Kang, 2012. "Financial crisis and quantitative easing: can broad money tell us anything?," Heriot-Watt University Economics Discussion Papers 1206, Department of Economics, School of Management and Languages, Heriot Watt University.
  5. Hills, Robert & Hoggarth, Glenn, 2013. "Cross-border bank credit and global financial stability," Bank of England Quarterly Bulletin, Bank of England, vol. 53(2), pages 126-136.
  6. Holger Görg & Marina-Eliza Spaliara, 2013. "Export market exit, financial pressure and the crisis," Kiel Working Papers 1859, Kiel Institute for the World Economy.
  7. Barnett, Alina & Thomas, Ryland, 2013. "Has weak lending and activity in the United Kingdom been driven by credit supply shocks?," Bank of England working papers 482, Bank of England.
  8. Pattani, Aashish & Vera, Giuseppe & Wackett , James, 2011. "Going public: UK companies’ use of capital markets," Bank of England Quarterly Bulletin, Bank of England, vol. 51(4), pages 319-330.

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