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Bank Lending in the Knowledge Economy

Author

Listed:
  • Mr. Giovanni Dell'Ariccia
  • Dalida Kadyrzhanova
  • Ms. Camelia Minoiu
  • Mr. Lev Ratnovski

Abstract

We study bank portfolio allocations during the transition of the real sector to a knowledge economy in which firms use less tangible capital and invest more in intangible assets. We show that, as firms shift toward intangible assets that have lower collateral values, banks reallocate their portfolios away from commercial loans toward other assets, primarily residential real estate loans and liquid assets. This effect is more pronounced for large and less well capitalized banks and is robust to controlling for real estate loan demand. Our results suggest that increased firm investment in intangible assets can explain up to 20% of bank portfolio reallocation from commercial to residential lending over the last four decades.

Suggested Citation

  • Mr. Giovanni Dell'Ariccia & Dalida Kadyrzhanova & Ms. Camelia Minoiu & Mr. Lev Ratnovski, 2017. "Bank Lending in the Knowledge Economy," IMF Working Papers 2017/234, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:2017/234
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    More about this item

    Keywords

    WP; portfolio allocation; bank size; balance sheet; bank capital; intangible capital; bank lending; commercial loans; real estate loans; liquid assets; asset growth; bank capital erosion; capitalized bank; bank assets; bank capitalization; bank level; bank portfolio; bank characteristic; bank FE; bank portfolio component; Loans; Financial statements; Bank credit; Asset allocation; Global;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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