EconPapers    
Economics at your fingertips  
 

Liquidity regulation and bank lending

Foly Ananou, Dimitris Chronopoulos, Amine Tarazi and John O.S. Wilson

Post-Print from HAL

Abstract: Bank liquidity shortages during the global financial crisis of 2007–2009 led to the introduction of liquidity regulations, the impact of which has attracted the attention of academics and policymakers. In this paper, we investigate the impact of liquidity regulation on bank lending. As a setting, we use the Netherlands, where a Liquidity Balance Rule (LBR) was introduced in 2003. The LBR was imposed on Dutch banks only and did not apply to other banks operating elsewhere within the Eurozone. Using this differential regulatory treatment to overcome identification concerns and a difference-in-differences approach, we find that the LBR increased the volume of lending by Dutch banks relative to other banks located in the Eurozone. Increased equity, an inflow of retail deposits and subsequent increase in balance sheet size allowed Dutch banks to increase lending despite having to meet the LBR requirements. The LBR also affected the loan composition of Dutch banks (with corporate and retail lending increasing more than mortgage lending) and the maturity profile of loan portfolios. Our results have relevance for policymakers tasked with monitoring the impact of liquidity regulations on banks and the real economy.

Date: 2021-08
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Published in Journal of Corporate Finance, 2021, 69, pp.101997. ⟨10.1016/j.jcorpfin.2021.101997⟩

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: Liquidity regulation and bank lending (2021) Downloads
Working Paper: Liquidity Regulation and Bank Lending (2021)
Working Paper: Liquidity Regulation and Bank Lending (2021) Downloads
Working Paper: Liquidity Regulation and Bank Lending (2020) 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:hal:journl:hal-04881054

DOI: 10.1016/j.jcorpfin.2021.101997

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD (hal@ccsd.cnrs.fr).

 
Page updated 2025-03-23
Handle: RePEc:hal:journl:hal-04881054