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Bank Credit, Asset Prices and Financial Stability; Evidence From French Banks

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  • Cyril Pouvelle

Abstract

This paper analyses the effect of asset prices on credit growth in France and tries to disentangle credit demand and supply factors, both for the whole 1993-2010 period and during periods of financial instability. Using bank-level panel data at a quarterly frequency, stock price growth is shown to have a significant effect on lending growth over the whole period, but without credit supply factors being singled out. By contrast, housing price growth has a significant effect during periods of financial instability only, even after controlling for credit demand effects. These results show that credit demand factors do play a large role but also provide evidence of tighter credit constraints on households in financial instability periods.

Suggested Citation

  • Cyril Pouvelle, 2012. "Bank Credit, Asset Prices and Financial Stability; Evidence From French Banks," IMF Working Papers 12/103, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:12/103
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    References listed on IDEAS

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    1. Chen, Nan-Kuang, 2001. "Bank net worth, asset prices and economic activity," Journal of Monetary Economics, Elsevier, vol. 48(2), pages 415-436, October.
    2. Thomas Chaney & David Sraer & David Thesmar, 2012. "The Collateral Channel: How Real Estate Shocks Affect Corporate Investment," American Economic Review, American Economic Association, vol. 102(6), pages 2381-2409, October.
    3. Ben S. Bernanke & Mark Gertler, 1995. "Inside the Black Box: The Credit Channel of Monetary Policy Transmission," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 27-48, Fall.
    4. Régis Blazy & Laurent Weill, 2006. "Le rôle des garanties dans les prêts des banques françaises," Revue d'économie politique, Dalloz, vol. 116(4), pages 501-522.
    5. Frömmel, Michael & Schmidt, Torsten, 2006. "Bank Lending and Asset Prices in the Euro Area," RWI Discussion Papers 42, RWI - Leibniz-Institut für Wirtschaftsforschung.
    6. Altunbas, Yener & Gambacorta, Leonardo & Marques-Ibanez, David, 2009. "Securitisation and the bank lending channel," European Economic Review, Elsevier, vol. 53(8), pages 996-1009, November.
    7. Coffinet, J. & Coudert, V. & Pop, A. & Pouvelle, C., 2011. "Two-way interplays between capital buffers, credit and output: evidence from French banks," Working papers 316, Banque de France.
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    Cited by:

    1. Kim, Hyun Jeong & Lee, Dongyeol & Son, Jong Chil & Son, Min Kyu, 2014. "Household indebtedness in Korea: Its causes and sustainability," Japan and the World Economy, Elsevier, vol. 29(C), pages 59-76.
    2. Filip, Bogdan Florin, 2014. "Financial-Monetary Instability Factors within the Framework of the Recent Crisis in Romania," Working Papers of National Institute of Economic Research 141213, National Institute of Economic Research.

    More about this item

    Keywords

    Asset prices; Financial stability; France; Credit growth; financial instability; stock price; banking; bank lending; General Financial Markets;

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