Banks’ Business Model and Credit Supply in Chile: The Role of a State-Owned Bank

Biron Miguel, Felipe Córdova and Antonio Lemus

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Abstract: During the recent financial crisis, banks suffered losses on a scale not witnessed since the Great Depression, partly due to two structural developments in the banking industry; deregulation combined with financial innovation. The regulatory response concentrated on the Basel III recommendations, affected banks' business model and funding patterns. Consequently, these changes have had implications on how banks grant loans, how they react to monetary policy shocks, and on how they respond to global shocks. We find evidence of significant interactions between banks' lending and both monetary and global shocks in Chile. In particular, these interactions have been significantly shaped by the counter-cyclical behavior of the state-owned bank. The good governance of this institution along with a sound legal and economic environment, have propitiated this result.

Keywords: bank lending channel; global factors; Banco Estado (search for similar items in EconPapers)
Date: 2019
Note: View the original document on HAL open archive server: https://hal.science/hal-04141896
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Working Paper: Banks' business model and credit supply in Chile: the role of a state-owned bank (2019)
Working Paper: Banks’ Business Model and Credit Supply in Chile: The Role of a State-Owned Bank (2019)
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