Rescue packages and bank lending

Michael Brei, Leonardo Gambacorta and Goetz von Peter ()

Journal of Banking & Finance, 2013, vol. 37, issue 2, 490-505

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)
JEL-codes: E44 G01 G21 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (109)

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Related works:
Working Paper: Rescue packages and bank lending (2013)
Working Paper: Rescue packages and bank lending (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:37:y:2013:i:2:p:490-505

DOI: 10.1016/j.jbankfin.2012.09.010

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