Disentangling the Transmission Channel NPLs-Cost of Capital-Lending Supply

Gabriella Chiesa and José Manuel Mansilla-Fernández ()

Departmental Working Papers from Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano

Abstract: This paper analyses the effects of non-performing loans (NPLs) on the cost of capital, and on lending and liquidity supply, for a sample of 225 Eurozone banks over the period 2002Q1-2016Q4. Our results demonstrate that NPLs increase the cost of capital, which reduces both lending supply and liquidity creation. This phenomenon is comparatively more significant for periphery county banks than for core country banks.

Keywords: Cost of capital; Credit supply; Liquidity creation; Leverage; NPLs (search for similar items in EconPapers)
JEL-codes: G11 G21 G32 H63 (search for similar items in EconPapers)
Date: 2018-07-12
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Disentangling the transmission channel NPLs-cost of capital-lending supply (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:mil:wpdepa:2018-06

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