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Banks' business model and credit supply in Chile: the role of a state-owned bank

Miguel Biron, Julio Cordova () and Antonio Lemus ()

No 800, BIS Working Papers from Bank for International Settlements

Abstract: During the Global Financial Crisis, banks suffered losses on a scale not witnessed since the Great Depression, partly due to two major structural developments in the banking industry; deregulation combined with financial innovation. In the aftermath of the financial crisis, the regulatory response concentrated on the Basel III recommendations, raising core capital requirements for banking institutions, which affected their business models and funding patterns. Consequently, these changes have had significant implications for how banks grant loans, how they react to monetary policy shocks, and how they respond to external shocks. We find evidence of significant interactions between the bank lending channel and both monetary and global shocks in Chile. These links have changed significantly after the Global Financial Crisis. In particular, they have been shaped by the counter-cyclical behavior of a state-owned bank.

Keywords: bank lending channel; global factors; Banco Estado (search for similar items in EconPapers)
JEL-codes: E40 E44 E51 E52 E58 G21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban, nep-cba, nep-mac and nep-mon
Date: 2019-07
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Working Paper: Banks’ Business Model and Credit Supply in Chile: The Role of a State-Owned Bank (2019) Downloads
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