Rescue packages and bank lending
AbstractThis paper examines whether the rescue measures adopted during the global financial crisis helped to sustain the supply of bank lending. The analysis proposes a setup that allows testing for structural shifts in the bank lending equation, and employs a novel dataset covering large international banks headquartered in 14 major advanced economies for the period 1995-2010. While stronger capitalisation sustains loan growth in normal times, banks during a crisis can turn additional capital into greater lending only once their capitalisation exceeds a critical threshold. This suggests that recapitalisations may not translate into greater credit supply until bank balance sheets are sufficiently strengthened.
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Bibliographic InfoPaper provided by Bank for International Settlements in its series BIS Working Papers with number 357.
Length: 31 pages
Date of creation: Nov 2011
Date of revision:
bank lending channel; monetary policy; financial crisis; rescue packages; recapitalisation;
Other versions of this item:
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
- G01 - Financial Economics - - General - - - Financial Crises
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-11-21 (All new papers)
- NEP-BAN-2011-11-21 (Banking)
- NEP-CBA-2011-11-21 (Central Banking)
- NEP-HME-2011-11-21 (Heterodox Microeconomics)
- NEP-OPM-2011-11-21 (Open Economy Macroeconomic)
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