Rescue packages and bank lending

Michael Brei, Leonardo Gambacorta and Goetz von Peter ()

No 357, BIS Working Papers from Bank for International Settlements

Abstract: This paper examines whether the rescue measures adopted during the global financial crisis helped to sustain the supply of bank lending. The analysis proposes a setup that allows testing for structural shifts in the bank lending equation, and employs a novel dataset covering large international banks headquartered in 14 major advanced economies for the period 1995-2010. While stronger capitalisation sustains loan growth in normal times, banks during a crisis can turn additional capital into greater lending only once their capitalisation exceeds a critical threshold. This suggests that recapitalisations may not translate into greater credit supply until bank balance sheets are sufficiently strengthened.

Keywords: bank lending channel; monetary policy; financial crisis; rescue packages; recapitalisation (search for similar items in EconPapers)
Pages: 31 pages
Date: 2011-11
New Economics Papers: this item is included in nep-ban, nep-cba, nep-hme and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (33)

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Related works:
Journal Article: Rescue packages and bank lending (2013)
Working Paper: Rescue packages and bank lending (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:bis:biswps:357

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