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From Subprime Loans to Subprime Growth? Evidence for the Euro Area Author info | Abstract | Publisher info | Download info | Related research | Statistics Martin Cihák
Petya Koeva Brooks
The global financial crisis has highlighted the potential of financial conditions for influencing real economic activity. We examine the linkages between the financial and real sectors in the euro area, finding that (i) bank loan supply responds negatively to declines in bank soundness; (ii) a cutback in bank loan supply has a negative impact on economic activity; (iii) a positive shock to the corporate bond spread lowers industrial output; and (iv) risk indicators for the banking, corporate, and public sectors show an improvement beginning in 2002–03, followed by a major deterioration since 2007. These estimates imply that the currently estimated bank losses would subtract some 2 percentage points from the euro area output (but with considerable uncertainty around the estimates).
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Paper provided by International Monetary Fund in its series IMF Working Papers with number
09/69.
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Length: 35 pages
Date of creation: 27 Mar 2009Date of revision:
Handle: RePEc:imf:imfwpa:09/69Contact details of provider: Postal: International Monetary Fund, Washington, DC USA Phone: (202) 623-7000 Fax: (202) 623-4661 Email: Web page: http://www.imf.org/external/pubind.htm More information through EDIRC
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Keywords: Credit risk ; Euro Area ; Financial sector ; Real sector ; Banking ; Demand for money ; Interest rates ; Financial risk ; Economic models ; Other versions of this item:
This paper has been announced in the following NEP Reports :
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.: Altunbas, Yener & Fazylov, Otabek & Molyneux, Philip, 2002.
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Adolfo Barajas & Roberto Steiner, 2002.
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02/53, International Monetary Fund.
Jesper Berg & Annalisa Ferrando & Gabe de Bondt & Silvia Scopel, 2005.
"The bank lending survey for the euro area ,"
Occasional Paper Series
23, European Central Bank.
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Jorge A. Chan-Lau & Iryna V. Ivaschenko, 2002.
"The Corporate Spread Curve and Industrial Production in the United States ,"
IMF Working Papers
02/8, International Monetary Fund.
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Martin Cihák & Tigran Poghosyan, 2009.
"Distress in European Banks: An Analysis Based on a New Dataset ,"
IMF Working Papers
09/9, International Monetary Fund.
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Mody, Ashoka & Taylor, Mark P., 2004.
"Financial predictors of real activity and the financial accelerator ,"
Economics Letters ,
Elsevier, vol. 82(2), pages 167-172, February.
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Kakes, Jan & Sturm, Jan-Egbert, 2002.
"Monetary policy and bank lending:: Evidence from German banking groups ,"
Journal of Banking & Finance ,
Elsevier, vol. 26(11), pages 2077-2092, November.
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