The Bank Lending Channel Revisited

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The Bank Lending Channel Revisited

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Author : Piti Disyatat
language : en
Publisher:
Release Date : 2010

The Bank Lending Channel Revisited written by Piti Disyatat and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010 with Bank loans categories.

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.

How The Credit Channel Works

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Author : Lamont K. Black
language : en
Publisher:
Release Date : 2007

How The Credit Channel Works written by Lamont K. Black and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2007 with Bank loans categories.

Negative Monetary Policy Rates And Portfolio Rebalancing Evidence From Credit Register Data

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Author : Margherita Bottero
language : en
Publisher: International Monetary Fund
Release Date : 2019-02-28

Negative Monetary Policy Rates And Portfolio Rebalancing Evidence From Credit Register Data written by Margherita Bottero and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-02-28 with Business & Economics categories.

We study negative interest rate policy (NIRP) exploiting ECB's NIRP introduction and administrative data from Italy, severely hit by the Eurozone crisis. NIRP has expansionary effects on credit supply-- -and hence the real economy---through a portfolio rebalancing channel. NIRP affects banks with higher ex-ante net short-term interbank positions or, more broadly, more liquid balance-sheets, not with higher retail deposits. NIRP-affected banks rebalance their portfolios from liquid assets to credit—especially to riskier and smaller firms—and cut loan rates, inducing sizable real effects. By shifting the entire yield curve downwards, NIRP differs from rate cuts just above the ZLB.

The Chicago Plan Revisited

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Author : Mr.Jaromir Benes
language : en
Publisher: International Monetary Fund
Release Date : 2012-08-01

The Chicago Plan Revisited written by Mr.Jaromir Benes and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012-08-01 with Business & Economics categories.

At the height of the Great Depression a number of leading U.S. economists advanced a proposal for monetary reform that became known as the Chicago Plan. It envisaged the separation of the monetary and credit functions of the banking system, by requiring 100% reserve backing for deposits. Irving Fisher (1936) claimed the following advantages for this plan: (1) Much better control of a major source of business cycle fluctuations, sudden increases and contractions of bank credit and of the supply of bank-created money. (2) Complete elimination of bank runs. (3) Dramatic reduction of the (net) public debt. (4) Dramatic reduction of private debt, as money creation no longer requires simultaneous debt creation. We study these claims by embedding a comprehensive and carefully calibrated model of the banking system in a DSGE model of the U.S. economy. We find support for all four of Fisher's claims. Furthermore, output gains approach 10 percent, and steady state inflation can drop to zero without posing problems for the conduct of monetary policy.

Bank Leverage And Monetary Policy S Risk Taking Channel

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Author : Mr.Giovanni Dell'Ariccia
language : en
Publisher: International Monetary Fund
Release Date : 2013-06-06

Bank Leverage And Monetary Policy S Risk Taking Channel written by Mr.Giovanni Dell'Ariccia and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013-06-06 with Business & Economics categories.

We present evidence of a risk-taking channel of monetary policy for the U.S. banking system. We use confidential data on the internal ratings of U.S. banks on loans to businesses over the period 1997 to 2011 from the Federal Reserve’s survey of terms of business lending. We find that ex-ante risk taking by banks (as measured by the risk rating of the bank’s loan portfolio) is negatively associated with increases in short-term policy interest rates. This relationship is less pronounced for banks with relatively low capital or during periods when banks’ capital erodes, such as episodes of financial and economic distress. These results contribute to the ongoing debate on the role of monetary policy in financial stability and suggest that monetary policy has a bearing on the riskiness of banks and financial stability more generally.

Aggregate Uncertainty And The Supply Of Credit

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Author : Mr.Fabian Valencia
language : en
Publisher: International Monetary Fund
Release Date : 2013-12-02

Aggregate Uncertainty And The Supply Of Credit written by Mr.Fabian Valencia and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013-12-02 with Business & Economics categories.

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.

The Ecb S Monetary Analysis Revisited

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Author : Helge Berger
language : en
Publisher: International Monetary Fund
Release Date : 2008-07

The Ecb S Monetary Analysis Revisited written by Helge Berger and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2008-07 with Business & Economics categories.

Monetary aggregates continue to play an important role in the ECB's policy strategy. This paper revisits the case for money, surveying the ongoing theoretical and empirical debate. The key conclusion is that an exclusive focus on non-monetary factors alone may leave the ECB with an incomplete picture of the economy. However, treating monetary factors as a separate matter is a second-best solution. Instead, a general-equilibrium inspired analytical framework that merges the economic and monetary "pillars" of the ECB's policy strategy appears the most promising way forward. The role played by monetary aggregates in such unified framework may be rather limited. However, an integrated framework would facilitate the presentation of policy decisions by providing a clearer narrative of the relative role of money in the interaction with other economic and financial sector variables, including asset prices, and their impact on consumer prices.

Drivers Of Bank Lending

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Author : Hartmut Brinkmeyer
language : en
Publisher: Springer
Release Date : 2014-09-24

Drivers Of Bank Lending written by Hartmut Brinkmeyer and has been published by Springer this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014-09-24 with Political Science categories.

​After the recent financial crisis has hooked the banking system to its very foundations, Hartmut Brinkmeyer contributes to the question of how bank characteristics influence bank loan supply during crisis periods by developing a well-founded theoretical framework. The econometrical design deploys a number of remarkably innovative ideas such as the implementation of a bank-specific, self-chosen target capital ratio or a very convincing approach to the disentanglement of loan supply and demand. The results of this study deliver a profound insight into the lending behavior of European banks and explicitly urge academic and practical discussion.

Currency Crises And The Real Economy

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Author : Piti Disyatat
language : en
Publisher:
Release Date : 2006

Currency Crises And The Real Economy written by Piti Disyatat and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2006 with categories.

This paper shows that the quality of banks within each country is one of the important factors that can account for the fact that developing economies tend to suffer more severe output contractions in the wake of a currency crisis than more mature economies. In particular, countries with a banking sector whose balance sheets are healthy, in terms of having high net worth and low foreign currency exposure, are much less likely to suffer a contraction in the wake of an unexpected depreciation.

Corporate Governance In Banking And Investor Protection

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Author : Belén Díaz Díaz
language : en
Publisher: Springer
Release Date : 2019-06-06

Corporate Governance In Banking And Investor Protection written by Belén Díaz Díaz and has been published by Springer this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-06-06 with Business & Economics categories.

This book explores the status quo of corporate governance in banking and investor protection from both theoretical and practical perspectives. Bringing together original conclusions with a regional and international focus, it provides a timely and comprehensive overview of the effectiveness of corporate governance in the financial sector and an assessment of investor protection. It also includes a number of examples and case studies to illustrate the findings. The book compares corporate governance in the banking and financial industries before and after the financial crisis, and helps to evaluate the effect of the recommendations and regulations that have been developed in the interim.