Bank lending in Switzerland: Capturing cross-sectional heterogeneity and asymmetry over time

Toni Beutler, Matthias Gubler, Simona Hauri () and Sylvia Kaufmann
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Simona Hauri: University of Zurich

No 20.04, Working Papers from Swiss National Bank, Study Center Gerzensee

Abstract: We study the bank lending channel in Switzerland over three decades using unbalanced quarterly bank-individual data spanning 1987 to 2016. In contrast to the usual empirical approach, we take an agnostic stance on which bank characteristic drives the heterogenous lending response to interest rate changes. In addition, our empirical model allows for a changing lending reaction occurring over time in a state-dependent manner. Our results are consistent with the existence of a bank lending channel, which is however muted in specific periods. Such episodes are characterized by increased economic uncertainty, which negatively impacts loan growth.

Pages: 45 pages
Date: 2020-08
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Working Paper: Bank lending in Switzerland: Capturing cross-sectional heterogeneity and asymmetry over time (2020)
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