Search Frictions, Credit Market Liquidity and Net Interest Margin Cyclicality

Kevin Beaubrun-Diant and Fabien Tripier

Economica, 2015, vol. 82, issue 325, 79-102

Abstract: type="main" xml:id="ecca12101-abs-0001" xml:lang="en">

This paper contributes to the body of knowledge on search frictions in credit markets by demonstrating their ability to explain why the net interest margins of banks behave countercyclically. During periods of expansion, a fall in the net interest margin proceeds from two mechanisms: (i) lenders accept that they must finance entrepreneurs who have lower productivity; (ii) the liquidity of the credit market rises, which simplifies access to loans for entrepreneurs and thereby reinforces their threat point when bargaining the interest rate of the loan.

Date: 2015
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://hdl.handle.net/10.1111/ecca.2014.82.issue-325 (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Search Frictions, Credit Market Liquidity, and Net Interest Margin Cyclicality (2015)
Working Paper: Search Frictions, Credit Market Liquidity, and Net Interest Margin Cyclicality (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:econom:v:82:y:2015:i:325:p:79-102

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0013-0427

Access Statistics for this article

Economica is currently edited by Frank Cowell, Tore Ellingsen and Alan Manning

More articles in Economica from London School of Economics and Political Science Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().