The bank lending channel and Swiss banking: a survey-based approach

Banu Simmons-Sueer

International Review of Applied Economics, 2014, vol. 28, issue 1, 45-63

Abstract: This paper investigates the issue of the bank-lending channel in Switzerland. Using survey data to reflect loan supply and demand factors, we investigate the dynamic behaviour of aggregate loans in a VAR setting. Our findings indicate that higher interest rates lead to tightened loan approvals, and liquidity is a binding constraint as the contraction in deposits exceeds the reduction in loan growth following a monetary shock. Thus, banks' actions seem to aggravate (ameliorate) the initial effects of higher (lower) interest rates on aggregate demand.

Date: 2014
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DOI: 10.1080/02692171.2013.826636

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