Assessing the credit creation process under the Basel III framework: Some evidence from the Eurozone

Fotini Economou and Yannis Panagopoulos

Finance Research Letters, 2023, vol. 51, issue C

Abstract: This paper re-examines the exogeneity/endogeneity debate regarding the credit creation process for the Eurozone banking system under the Basel III framework. A two-stage theoretical approach is employed to assess an equity/credit multiplier model and a credit creation model. The results reveal the existence of a mixed outcome (driven by aggregate demand and Basel III factors) regarding the credit creation process for the sample countries and the period under examination. The active but limited effectiveness of the Basel III factors upon the Eurozone banking system is revealed, providing important information for policymakers.

Keywords: Endogenous/exogenous money creation; Basel III; Covid-19 (search for similar items in EconPapers)
JEL-codes: C22 C23 E51 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:51:y:2023:i:c:s1544612322006055

DOI: 10.1016/j.frl.2022.103428

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