Credit Supply: Are there negative spillovers from banks’ proprietary trading? (RM/19/005-revised-)

Michael Kurz and Stefanie Kleimeier
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Michael Kurz: RS: GSBE other - not theme-related research, Finance

No 26, Research Memorandum from Maastricht University, Graduate School of Business and Economics (GSBE)

Abstract: Following the global financial crisis, policy makers considered regulations that restrict banks’ activities which were motivated by concerns that banks use central bank borrowing, government guarantees, or subsidies to fund securities trading instead of lending to the real economy. Using a global sample of 132 major banks from 2003 to 2016, we find that banks’ securities trading is indeed associated with decreased loan supply. Effects are stronger for domestic lending markets, during crisis periods, and in countries with deeper financial markets. However, corporate capital expenditures and employment growth are unaffected, suggesting that policy makers’ concerns are only partly justified.

JEL-codes: G01 G21 G28 (search for similar items in EconPapers)
Date: 2019-10-24
New Economics Papers: this item is included in nep-ban, nep-cfn and nep-ifn
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:unm:umagsb:2019026

DOI: 10.26481/umagsb.2019026

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