Author: Longmei ZhangPublisher:
ISBN: 9783865585851
Category :
Languages : de
Pages : 32
Book Description
Bank Capital Regulation, the Lending Channel and Business Cycles
Author: Longmei ZhangPublisher:
ISBN: 9783865585851
Category :
Languages : de
Pages : 32
Book Description
Effects of Bank Capital on Lending
Author: Joseph M. BerrospidePublisher: DIANE Publishing
ISBN: 1437939864
Category : Business & Economics
Languages : en
Pages : 50
Book Description
The effect of bank capital on lending is a critical determinant of the linkage between financial conditions and real activity, and has received especial attention in the recent financial crisis. The authors use panel-regression techniques to study the lending of large bank holding companies (BHCs) and find small effects of capital on lending. They then consider the effect of capital ratios on lending using a variant of Lown and Morgan's VAR model, and again find modest effects of bank capital ratio changes on lending. The authors¿ estimated models are then used to understand recent developments in bank lending and, in particular, to consider the role of TARP-related capital injections in affecting these developments. Illus. A print on demand pub.
Bank Leverage and Monetary Policy's Risk-Taking Channel
Author: Mr.Giovanni Dell'AricciaPublisher: International Monetary Fund
ISBN: 1484381130
Category : Business & Economics
Languages : en
Pages : 41
Book Description
We present evidence of a risk-taking channel of monetary policy for the U.S. banking system. We use confidential data on the internal ratings of U.S. banks on loans to businesses over the period 1997 to 2011 from the Federal Reserve’s survey of terms of business lending. We find that ex-ante risk taking by banks (as measured by the risk rating of the bank’s loan portfolio) is negatively associated with increases in short-term policy interest rates. This relationship is less pronounced for banks with relatively low capital or during periods when banks’ capital erodes, such as episodes of financial and economic distress. These results contribute to the ongoing debate on the role of monetary policy in financial stability and suggest that monetary policy has a bearing on the riskiness of banks and financial stability more generally.
Bank Capital and Risk-Taking
Author: Stéphanie M. StolzPublisher: Springer Science & Business Media
ISBN: 3540485449
Category : Business & Economics
Languages : en
Pages : 163
Book Description
The year-long consultations on Basel II mirror the international popularity of capital requirements as a regulatory instrument. Yet, the impact of capital re quirements on banks' behavior is not fully understood. The aim of this study is to contribute to this understanding by answering the following questions: How do banks adjust capital and risk after an increase in capital requirements? How do banks adjust their regulatory capital buffer over the business cycle? And what is the impact of banks' charter value on the regulatory capital buffer? The research undertaken for this study has benefited from support in terms of ideas, research facilities, and, not least, financial funding. My thanks go first of all to Claudia M. Buch for her constant encouragement, her continuous guidance, and her confidence in my research ideas. My thanks go also to the Kiel Institute for World Economics and its staff for providing a very fertile academic ground for my research and for providing excellent research facilities. In fact, conduct ing this study would not have been possible without the support of my colleagues at the Kiel Institute and elsewhere. In particular, I am grateful to Horst Siebert for providing me the freedom to pursue this topic. My special thanks go to Jorg Breitung, Kai Carstensen, and Dieter Urban for providing input on econometric issues. I am also grateful to Andrea Schertler for the long and productive discus sions I had on various parts of this study.
Capital Requirements and Business Cycles with Credit Market Imperfections
Author: Pierre-Richard AgénorCapital Requirements and Business Cycles with Credit Market Imperfections
Author: Pierre-Richard AgénorPublisher:
ISBN:
Category :
Languages : en
Pages : 53
Book Description
The business cycle effects of bank capital regulatory regimes are examined in a New Keynesian model with credit market imperfections and a cost channel of monetary policy. Key features of the model are that bank capital increases incentives for banks to monitor borrowers, thereby reducing the probability of default, and excess capital generates benefits in terms of reduced regulatory scrutiny. Basel I and Basel II-type regulatory regimes are defined, and the model is calibrated for a middle-income country. Simulations of supply and demand shocks show that, depending on the elasticity that relates the repayment probability to the capital-loan ratio, a Basel II-type regime may be less procyclical than a Basel I-type regime.
Bank Lending in the Knowledge Economy
Author: Mr.Giovanni Dell'AricciaPublisher: International Monetary Fund
ISBN: 1484324897
Category : Business & Economics
Languages : en
Pages : 45
Book Description
We study bank portfolio allocations during the transition of the real sector to a knowledge economy in which firms use less tangible capital and invest more in intangible assets. We show that, as firms shift toward intangible assets that have lower collateral values, banks reallocate their portfolios away from commercial loans toward other assets, primarily residential real estate loans and liquid assets. This effect is more pronounced for large and less well capitalized banks and is robust to controlling for real estate loan demand. Our results suggest that increased firm investment in intangible assets can explain up to 20% of bank portfolio reallocation from commercial to residential lending over the last four decades.
Capital Requirements and Business Cycles with Credit Market Imperfections
Author: P.-R. AgÜ♭norMoney and Credit Shocks in Business Cycle Models with Limited Participation
Author: Marian MellerPublisher: GRIN Verlag
ISBN: 3638360970
Category : Business & Economics
Languages : en
Pages : 125
Book Description
In business cycle theory, credit can be regarded either as enhancement mechanism for monetary policy or as source of random shocks to the economy. The current paper compares the effects of monetary shocks via the credit channel (“money shocks”) with non-monetary shocks to bank lending (“credit shocks”) by introducing them into a single benchmark model. The lending channel serves as a propagation mechanism for both type of disturbances that both come from the supply side and affect the financial sector first. The key feature of the model framework is limited participation: households have to make their portfolio decision before observing the shock. To generate a credit shock, stochastic bank capital and a capital adequacy constraint are added to the model. Each of the models can only explain some of the business cycle phenomena observed in U.S. data. In particular, the money shock model can account for the positive correlation of money, loans, and prices. The bank capital shock scenario is more approriate to replicate the countercyclical movements of prices. Both models produce a strong, short-lived liquidity effect on nominal interest rates.
The Right Balance for Banks
Author: William R. ClinePublisher: Columbia University Press
ISBN: 0881327220
Category : Business & Economics
Languages : en
Pages : 357
Book Description
The global financial crisis produced an important agreement among regulators in 2010–11 to raise capital requirements for banks to protect them from insolvency in the event of another emergency. In this book, William R. Cline, a leading expert on the global financial system, employs sophisticated economic models to analyze whether these reforms, embodied in the Third Basel Accord, have gone far enough. He calculates how much higher bank capital reduces the risk of banking crises, providing a benefit to the economy. On the cost side, he estimates how much higher capital requirements raise the lending rate facing firms, reducing investment in plant and equipment and thus reducing output in the economy. Applying a plausible range of parameters, Cline arrives at estimates for the optimal level of equity capital relative to total bank assets. This study also challenges the recent "too much finance" literature, which holds that in advanced countries banking sectors are already too large and are curbing growth.