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Loan Supply And Bank Capital
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Book Synopsis Effects of Bank Capital on Lending by : Joseph M. Berrospide
Download or read book Effects of Bank Capital on Lending written by Joseph M. Berrospide and published by DIANE Publishing. This book was released on 2011-04 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: The effect of bank capital on lending is a critical determinant of the linkage between financial conditions and real activity, and has received especial attention in the recent financial crisis. The authors use panel-regression techniques to study the lending of large bank holding companies (BHCs) and find small effects of capital on lending. They then consider the effect of capital ratios on lending using a variant of Lown and Morgan's VAR model, and again find modest effects of bank capital ratio changes on lending. The authors¿ estimated models are then used to understand recent developments in bank lending and, in particular, to consider the role of TARP-related capital injections in affecting these developments. Illus. A print on demand pub.
Book Synopsis Bank Capital and Lending: An Extended Framework and Evidence of Nonlinearity by : Mr.Mario Catalan
Download or read book Bank Capital and Lending: An Extended Framework and Evidence of Nonlinearity written by Mr.Mario Catalan and published by International Monetary Fund. This book was released on 2017-11-16 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper studies the transmission of bank capital shocks to loan supply in Indonesia. A series of theoretically founded dynamic panel data models are estimated and find nonlinear effects of capital on loan growth: the response of weaker banks to changes in their capital positions is larger than that of stronger banks. This non-linearity implies that not only the level of capital but also its distribution across banks in the financial system affects the transmission of shocks to aggregate lending. Likewise, the effects of bank recapitalization on loan growth depend on banks’ starting capital positions and the size of capital injections.
Book Synopsis Loan Supply and Bank Capital by : Thomas Kick
Download or read book Loan Supply and Bank Capital written by Thomas Kick and published by . This book was released on 2018 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: In the presence of financial frictions, banks' capital position may constrain their ability to provide loans. The banking sector may thus have important feedback effects on the macroeconomy. To shed new light on this issue, we combine two approaches. First, we use microeconomic balance sheet data from Germany and estimate banks' loan supply response to capital changes. Second, we modify the model of Gertler and Karadi (2011) such that it can be calibrated to the estimated partial equilibrium elasticity of bank loan supply with respect to bank capital. Although the targeted elasticity is remarkably different from the one in the baseline model, banks continue to be an important originator and amplifier of macroeconomic shocks.Thus, combining microeconometric results with macroeconomic modeling provides evidence on the effects of the banking sector on the macroeconomy.
Book Synopsis Aggregate Uncertainty and the Supply of Credit by : Mr.Fabian Valencia
Download or read book Aggregate Uncertainty and the Supply of Credit written by Mr.Fabian Valencia and published by International Monetary Fund. This book was released on 2013-12-02 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt: Recent studies show that uncertainty shocks have quantitatively important effects on the real economy. This paper examines one particular channel at work: the supply of credit. It presents a model in which a bank, even if managed by risk-neutral shareholders and subject to limited liability, can exhibit self-insurance, and thus loan supply contracts when uncertainty increases. This prediction is tested with the universe of U.S. commercial banks over the period 1984-2010. Identification of credit supply is achieved by looking at the differential response of banks according to their level of capitalization. Consistent with the theoretical predictions, increases in uncertainty reduce the supply of credit, more so for banks with lower levels of capitalization. These results are weaker for large banks, and are robust to controlling for the lending and capital channels of monetary policy, to different measures of uncertainty, and to breaking the dataset in subsamples. Quantitatively, uncertainty shocks are almost as important as monetary policy ones with regards to the effects on the supply of credit.
Book Synopsis Financial Crisis and Bank Lending by : Simon H. Kwan
Download or read book Financial Crisis and Bank Lending written by Simon H. Kwan and published by DIANE Publishing. This book was released on 2010-10 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: Estimates the amount of tightening in bank commercial and industrial (C&I) loan rates during the financial crisis. After controlling for loan characteristics and bank fixed effects, as of 2010:Q1, the average C&I loan spread was 66 basis points or 23 percent above normal. From about 2005 to 2008, the loan spread averaged 23 basis points below normal. Thus, from the unusually loose lending conditions in 2007 to the much tighter conditions in 2010:Q1, the average loan spread increased by about 1 percentage point. The author finds that large and medium-sized banks tightened their loan rates more than small banks; while small banks tended to tighten less, they always charged more. Charts and tables.
Book Synopsis The Bank Lending Channel Revisited by : Piti Disyatat
Download or read book The Bank Lending Channel Revisited written by Piti Disyatat and published by . This book was released on 2010 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: A central proposition in research on the role that banks play in the transmission mechanism is that monetary policy imparts a direct impact on deposits and that deposits, insofar as they constitute the supply of loanable funds, act as the driving force of bank lending. This paper argues that the emphasis on policy-induced changes in deposits is misplaced. A reformulation of the bank lending channel is proposed that works primarily through the impact of monetary policy on banks' balance sheet strength and risk perception. Such a recasting implies, contrary to conventional wisdom, that greater reliance on market-based funding enhances the importance of the channel. The framework also shows how banks, depending on the strength of their balance sheets, could act either as absorbers or amplifiers of shocks originiating in the financial system.
Book Synopsis Bank Capital and Bank Lending. Evidence from Germany by : Lai Chu
Download or read book Bank Capital and Bank Lending. Evidence from Germany written by Lai Chu and published by GRIN Verlag. This book was released on 2021-01-27 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt: Bachelorarbeit aus dem Jahr 2019 im Fachbereich BWL - Bank, Börse, Versicherung, Note: 1,0, Johann Wolfgang Goethe-Universität Frankfurt am Main, Sprache: Deutsch, Abstract: This bachelor’s thesis is dealing with the relationship between Capital Ratios and lending behaviour of banks with the focus on the German banks. After the financial crisis in 2008/9, the assets of banks took severe losses and threatened the banks on the brink of bankruptcy. Afterwards the regulation of banks and its capital ratios became stricter. This regulation and requirement have an impact on the lending behaviour of banks and forced them to rethink the construction of their assets due to the maintaining of a regulated capital ratio. There are two different ways on approaching it. The first is by either adjusting their risk-weighted assets or the second is by increasing their levels of regulatory capital. This approaches led to different lending behaviours of the banks because loans are a main component of risk-weighted assets and assets in general. Nowadays there is a debate whether the new regulation is the reason why banks are lending less money than in the past and three scientific papers, which will be reviewed, have different arguments and different perspectives. The goal of this thesis is to take a look on assets, loans and capital ratios of German banks, compare and analyse them throughout the years in order to give an answer on the question whether capital ratios and the requirements have an impact on the lending of these banks. The first step is to give some insights about the definitions of the reviewed bank types in Germany and their business models, different ratios and their structure and how they are connected to the regulatory standard Basel III. Secondly, I will give a literature review and then the thesis will give an examination of a given data set about German banks. I lay my focus on the commercial banks and the so called “Sparkassen” (savings banks in Germany). By working with them, I want to find out a correlation between capital ratios and loan growths and provide a descriptive statistic about my calculations. I will also distinguish between small and large banks and analyse them separately in order to see if their behaviours differ from each other and if we are able to conclude that the size of their assets matters. In the end, the thesis will provide an analysis, which also involves the findings of the papers, of the results I found out and I will see if my analysis and thesis are agreeing with the statements of the papers.
Book Synopsis Monetary Policy in a Developing Country by : Charles Abuka
Download or read book Monetary Policy in a Developing Country written by Charles Abuka and published by International Monetary Fund. This book was released on 2015-12-23 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: The transmission of monetary policy to credit aggregates and the real economy can be impaired by weaknesses in the contracting environment, shallow financial markets, and a concentrated banking system. We empirically assess the bank lending channel in Uganda during 2010–2014 using a supervisory dataset of loan applications and granted loans. Our analysis focuses on a short period during which the policy rate rose by 1,000 basis points and then came down by 1,200 basis points. We find that an increase in interest rates reduces the supply of bank credit both on the extensive and intensive margins, and there is significant pass-through to retail lending rates. We document a strong bank balance sheet channel, as the lending behavior of banks with high capital and liquidity is different from that of banks with low capital and liquidity. Finally, we show the impact of monetary policy on real activity across districts depends on banking sector conditions. Overall, our results indicate significant real effects of the bank lending channel in developing countries.
Book Synopsis Bank Lending in the Knowledge Economy by : Mr.Giovanni Dell'Ariccia
Download or read book Bank Lending in the Knowledge Economy written by Mr.Giovanni Dell'Ariccia and published by International Monetary Fund. This book was released on 2017-11-07 with total page 45 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Book Synopsis Balance Sheet Strength and Bank Lending During the Global Financial Crisis by : Mr.Tümer Kapan
Download or read book Balance Sheet Strength and Bank Lending During the Global Financial Crisis written by Mr.Tümer Kapan and published by International Monetary Fund. This book was released on 2013-05-08 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the role of bank balance sheet strength in the transmission of financial sector shocks to the real economy. Using data from the syndicated loan market, we exploit variation in banks’ reliance on wholesale funding and their structural liquidity positions in 2007Q2 to estimate the impact of exposure to market freezes during 2007–08 on the supply of bank credit. We find that banks with strong balance sheets were better able to maintain lending during the crisis. In particular, banks that were ex-ante more dependent on market funding and had lower structural liquidity reduced the supply of credit more than other banks. However, higher and better-quality capital mitigated this effect. Our results suggest that strong bank balance sheets are key for the recovery of credit following crises, and provide support for regulatory proposals under the Basel III framework.
Book Synopsis From Subprime Loans to Subprime Growth? Evidence for the Euro Area by : Mr.Martin Cihak
Download or read book From Subprime Loans to Subprime Growth? Evidence for the Euro Area written by Mr.Martin Cihak and published by International Monetary Fund. This book was released on 2009-03-01 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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).
Book Synopsis Bank Loan Supply and Corporate Capital Structure by : Jianfu Shen
Download or read book Bank Loan Supply and Corporate Capital Structure written by Jianfu Shen and published by . This book was released on 2015 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper provides new evidence on the supply side effects on corporate capital structure in China. We find that bank-dependent firms, which are mainly large and state-owned companies in China, increase (decrease) their leverage ratios if loan supplies increase (decrease) relative to the case for small and private firms due to the inability of small and private firms to access bank loans. With their ability to substitute between different forms of capital, large and state-owned firms are relatively less (more) likely to use internal funds and equity financing when bank loans are (not) available than are small and private firms. During the credit boom in 2009 and 2010, the large and state-owned firms increase leverage ratios by 2.26% and 2.76% more than matched firms; and small and private firms are shown to decrease leverage in this period. These findings lend support to the importance of supply side effects and bank loan segmentation on capital structure decisions.
Book Synopsis Risky Bank Lending and Optimal Capital Adequacy Regulation by : Mr.Jaromir Benes
Download or read book Risky Bank Lending and Optimal Capital Adequacy Regulation written by Mr.Jaromir Benes and published by International Monetary Fund. This book was released on 2011-06-01 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study the welfare properties of a New Keynesian monetary economy with an essential role for risky bank lending. Banks lend funds deposited by households to a financial accelerator sector, and face penalties for maintaining insufficient net worth. The loan contract specifies an unconditional lending rate, which implies that banks can make loan losses. Their main response is to raise lending rates to rebuild net worth. Prudential rules that adjust minimum capital adequacy requirements in response to loan losses significantly increase welfare. But the gains from eliminating limited liability and moral hazard would be an order of magnitude larger.
Book Synopsis Bank Capital and Lending Behavior by : Leonardo Gambacorta
Download or read book Bank Capital and Lending Behavior written by Leonardo Gambacorta and published by . This book was released on 2003 with total page 64 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Bank Credit, Asset Prices and Financial Stability by : Mr.Cyril Pouvelle
Download or read book Bank Credit, Asset Prices and Financial Stability written by Mr.Cyril Pouvelle and published by International Monetary Fund. This book was released on 2012-04-01 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Book Synopsis Global Banks and International Shock Transmission by : Nicola Cetorelli
Download or read book Global Banks and International Shock Transmission written by Nicola Cetorelli and published by DIANE Publishing. This book was released on 2010-11 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: Global banks played a significant role in transmitting the 2007-09 financial crisis to emerging-market (EM) economies. The authors examine adverse liquidity shocks on main developed-country banking systems and their relationships to EM across Europe, Asia, and Latin Amer., isolating loan supply from loan demand effects. Loan supply in EM across Europe, Asia, and Latin Amer. was affected significantly through three separate channels: (1) a contraction in direct, cross-border lending by foreign banks; (2) a contraction in local lending by foreign banks¿ affiliates in EM; and (3) a contraction in loan supply by domestic banks, resulting from the funding shock to their balance sheets induced by the decline in interbank, cross-border lending. Charts and tables.
Book Synopsis Central Banking at a Crossroads by : Charles Goodhart
Download or read book Central Banking at a Crossroads written by Charles Goodhart and published by Anthem Press. This book was released on 2014-12-01 with total page 292 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book reflects on the innovations that central banks have introduced since the 2008 collapse of Lehman Brothers to improve their modes of intervention, regulation and resolution of financial markets and financial institutions. Authors from both academia and policy circles explore these innovations through four approaches: ‘Bank Capital Regulation’ examines the Basel III agreement; ‘Bank Resolution’ focuses on effective regimes for regulating and resolving ailing banks; ‘Central Banking with Collateral-Based Finance’ develops thought on the challenges that market-based finance pose for the conduct of central banking; and ‘Where Next for Central Banking’ examines the trajectory of central banking and its new, central role in sustaining capitalism.
