Rescue packages and bank lending

Michael Brei (), Leonardo Gambacorta and Goetz von Peter ()
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Michael Brei: EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique

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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.

Date: 2013
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Citations: View citations in EconPapers (97)

Published in Journal of Banking and Finance, 2013, 37, pp.490 - 505. ⟨10.1016/j.jbankfin.2012.09.010⟩

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Related works:
Journal Article: 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:hal:journl:hal-01410576

DOI: 10.1016/j.jbankfin.2012.09.010

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