Bank Lending Equations

Neil Thompson
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Neil Thompson: University of Salford

Chapter 8 in Portfolio Theory and the Demand for Money, 1993, pp 125-130 from Palgrave Macmillan

Abstract: Abstract Variations in sterling M3 are often closely associated with changes in sterling bank lending to UK residents. Such lending increased considerably after the removal of direct controls in the Competition and Credit Control reforms of 1971. The company sector, in particular, reduced its traditional reliance on the capital markets in the 1970s and increasingly began to use bank lending as a source of external finance. It is therefore not surprising to find that the breakdown of the broad demand for money function in the 1970s was accompanied by similar problems in the modelling of bank lending equations. Whereas studies based upon data periods covering the 1950s and 1960s, such as Norton (1969) and Artis (1978), had indicated that reasonably stable bank lending equations could be isolated, Cuthbertson and Foster (1982) found that, when later data periods were considered, the isolation of such functions became more problematical. Their study looked at bank lending to industrial and commercial companies, and in particular how such lending was modelled in versions of three large macro models current in the early 1980s.

Keywords: Market Clearing; Bank Lending; Liquid Asset; Lending Rate; Company Sector (search for similar items in EconPapers)
Date: 1993
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DOI: 10.1007/978-1-349-22827-0_8

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