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Government Support of Banks and Bank Lending

Listed author(s):
  • William Bassett

    ()

    (Board of Governors of the Federal Reserve System)

  • Selva Demiralp

    ()

    (Koc University)

  • Nathan Lloyd

    ()

    (Board of Governors of the Federal Reserve System)

The extraordinary steps taken by governments during the 2007-2009 financial crisis to prevent the failure of large financial institutions and support credit availability have invited heated debate. This paper comprehensively reviews empirical assessments of the benefits of those programs—such as their effectiveness in reducing bank failures or supporting new lending—introduces a combined dataset of five key programs that provided term debt or equity to banks in the U.S., and assesses the effects of such support on lending by U.S. banks. The results, using an instrumental variable approach, suggest that bank loans did not increase at institutions receiving government support.

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File URL: http://eaf.ku.edu.tr/sites/eaf.ku.edu.tr/files/erf_wp_1611.pdf
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Paper provided by Koc University-TUSIAD Economic Research Forum in its series Koç University-TUSIAD Economic Research Forum Working Papers with number 1611.

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Length: 50 pages
Date of creation: Oct 2016
Handle: RePEc:koc:wpaper:1611
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