EconPapers    
Economics at your fingertips  
 

The bank lending channel: lessons from the crisis

Leonardo Gambacorta () and David Marques-Ibanez ()

No 345, BIS Working Papers from Bank for International Settlements

Abstract: The 2007-2010 financial crisis highlighted the central role of financial intermediaries' stability in buttressing a smooth transmission of credit to borrowers. While results from the years prior to the crisis often cast doubts on the strength of the bank lending channel, recent evidence shows that bank-specific characteristics can have a large impact on the provision of credit. We show that new factors, such as changes in banks' business models and market funding patterns, had modified the monetary transmission mechanism in Europe and in the US prior to the crisis, and demonstrate the existence of structural changes during the period of financial crisis. Banks with weaker core capital positions, greater dependence on market funding and on non-interest sources of income restricted the loan supply more strongly during the crisis period. These findings support the Basel III focus on banks' core capital and on funding liquidity risks. They also call for a more forward-looking approach to the statistical data coverage of the banking sector by central banks. In particular, there should be a stronger focus on monitoring those financial factors that are likely to influence the functioning of the monetary transmission mechanism particularly in a period of crisis.

Keywords: bank lending channel; monetary policy; financial innovation (search for similar items in EconPapers)
Pages: 36 pages
Date: 2011-05
New Economics Papers: this item is included in nep-ban, nep-cba, nep-eec, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (175) Track citations by RSS feed

Downloads: (external link)
http://www.bis.org/publ/work345.pdf Full PDF document (application/pdf)
http://www.bis.org/publ/work345.htm (text/html)

Related works:
Journal Article: The bank lending channel: lessons from the crisis (2011)
Working Paper: The bank lending channel: lessons from the crisis (2011) Downloads
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:bis:biswps:345

Access Statistics for this paper

More papers in BIS Working Papers from Bank for International Settlements Contact information at EDIRC.
Bibliographic data for series maintained by Christian Beslmeisl ().

 
Page updated 2020-08-03
Handle: RePEc:bis:biswps:345