EconPapers    
Economics at your fingertips  
 

Bank liquidity creation and real economic output

Allen N. Berger and John Sedunov

Journal of Banking & Finance, 2017, vol. 81, issue C, 1-19

Abstract: We find that bank liquidity creation (LC) is statistically and economically significantly positively related to real economic output (GDP). This is robust to using instrumental variables and many robustness checks. LC also beats bank assets in “horse races.” On-balance sheet LC matters more for small banks and off-balance sheet LC matters more for large banks. Small bank LC generates more GDP per dollar than large bank LC, but large bank LC matters more overall because large banks provide much more LC than small banks. The LC-output relation is strongest in bank-dependent industries, consistent with the hypothesized transmission mechanism.

Keywords: Banks; Liquidity creation; GDP; Economic output (search for similar items in EconPapers)
JEL-codes: G20 G21 O40 O43 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0378426617300833
Full text for ScienceDirect subscribers only

Related works:
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:eee:jbfina:v:81:y:2017:i:c:p:1-19

Access Statistics for this article

Journal of Banking & Finance is currently edited by Ike Mathur

More articles in Journal of Banking & Finance from Elsevier
Series data maintained by Dana Niculescu ().

 
Page updated 2017-10-01
Handle: RePEc:eee:jbfina:v:81:y:2017:i:c:p:1-19