Credit Supply in Venezuela: A Non-Conventional Bank Lending Channel?

Ana María Chirinos-Leañez and Carolina Pagliacci
Authors registered in the RePEc Author Service: Ana Maria Chirinos-Leañez

No 8256, IDB Publications (Working Papers) from Inter-American Development Bank

Abstract: This paper evaluates whether fiscal and foreign exchange policy shocks canexplain both credit and credit supply in Venezuela. Empirical evidence suggests that between 65 and 90 percent of credit growth is linked to the buildup of banks' deposits caused by the monetary effects of fiscal expansions. For these cases, since credit is provided at equal or reduced interest rates, credit supply takes place. Loan supply can occur either endogenously, when fiscal domestic spending increases with expansionary aggregate supply shocks, or exogenously, when fiscal policy shocks emerge. The role of exogenous fiscal shocks in accounting for credit supply is preponderant in the long run. This evidence suggests fiscal shocks represent a non-conventional bank lending channel. Because this exogenous fiscally-triggered credit supply does not significantly contribute to boosting real activity, its major cost might be associated with high credit volatility.

Keywords: Bank loans; bank lending channel (search for similar items in EconPapers)
JEL-codes: C32 E5 E63 (search for similar items in EconPapers)
Date: 2017-04
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://publications.iadb.org/publications/english ... -Lending-Channel.pdf (application/pdf)

Related works:
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:idb:brikps:8256

Access Statistics for this paper

More papers in IDB Publications (Working Papers) from Inter-American Development Bank Contact information at EDIRC.
Bibliographic data for series maintained by Felipe Herrera Library ().