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Banking and the economy: what are the facts?

Author

Listed:
  • Cara S. Lown

Abstract

Cara S. Lown explores the banking industry's role in the economy and finds evidence supporting the idea that fluctuations in bank credit are related to fluctuations in economic activity. She also finds that bank asset holdings adjust before changes in economic activity and that the banking system's security-to-asset ratio strongly predicts economic growth. By analyzing terms of bank lending over the business cycle, Lown concludes that variations in lending terms are consistent with the argument that restrictions on bank credit adversely affect the economy. Lown's study reflects the renewed interest in the role of banking in the economy that has coincided with the failure of many banks and savings and loan associations.

Suggested Citation

  • Cara S. Lown, 1990. "Banking and the economy: what are the facts?," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Sep, pages 1-14.
    • Handle: RePEc:fip:fedder:y:1990:i:sep:p:1-14
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    Citations

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    Cited by:

    1. Jeong, Woocheon & Kymn, Kem O. & Kymn, Christine J., 2003. "The long-run interdependence of bank-health, investment-oriented bank loans, and economic performance: A time-series analysis," The Quarterly Review of Economics and Finance, Elsevier, vol. 43(1), pages 11-30.
    2. Duncan, Marvin R. & Fischer, William R. & Taylor, Richard D., 1996. "Rural Economic Development: New Opportunities And Challenges For Commercial Bankers," Agricultural Economics Reports 23354, North Dakota State University, Department of Agribusiness and Applied Economics.
    3. Stanton, Sonya Williams, 1998. "The Underinvestment Problem and Patterns in Bank Lending," Journal of Financial Intermediation, Elsevier, vol. 7(3), pages 293-326, July.
    4. Smant, David / D.J.C., 2002. "Bank credit in the transmission of monetary policy: A critical review of the issues and evidence," MPRA Paper 19816, University Library of Munich, Germany.

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