Abstract

http://ssrn.com/abstract=2247185
 
 

References (67)



 
 

Footnotes (18)



 


 



Balance Sheet Strength and Bank Lending During the Global Financial Crisis


Tümer Kapan


Federal National Mortgage Association (Fannie Mae)

Camelia Minoiu


International Monetary Fund (IMF)

May 14, 2015


Abstract:     
We examine the role of bank balance sheet strength in the transmission of financial sector shocks to the real economy. In particular, we exploit variation in banks’ reliance on wholesale funding and their structural liquidity positions in 2007Q2 to estimate the impact of exposure to the market freezes of 2007-2008 on the subsequent supply of large corporate loans. We find that banks with stronger balance sheets were better able to maintain lending during the global stage of the financial crisis. In particular, banks that were ex ante more dependent on market funding and had lower structural liquidity reduced the supply of credit more than other banks. However, higher levels of better-quality capital mitigated this effect. Our results suggest a bank funding channel by which healthier banks have access to cheaper market funds. These findings indicate that strong financial intermediary balance sheets are key for the recovery of credit after large financial sector shocks and support regulatory proposals under the Basel III framework.

Number of Pages in PDF File: 48

Keywords: bank lending channel, wholesale funding, capital, net stable funding ratio, Basel III

JEL Classification: G21, G18, G01


Open PDF in Browser Download This Paper

Date posted: April 9, 2013 ; Last revised: May 15, 2015

Suggested Citation

Kapan, Tümer and Minoiu, Camelia, Balance Sheet Strength and Bank Lending During the Global Financial Crisis (May 14, 2015). Available at SSRN: http://ssrn.com/abstract=2247185 or http://dx.doi.org/10.2139/ssrn.2247185

Contact Information

Tümer Kapan
Federal National Mortgage Association (Fannie Mae) ( email )
3900 Wisconsin Avenue, NW
Washington, DC 20016-2892
United States
Camelia Minoiu (Contact Author)
International Monetary Fund (IMF) ( email )
1700 19th Street, NW
Washington, DC 20431
United States
2026239731 (Phone)
HOME PAGE: http://www.camelia-minoiu.com/
Feedback to SSRN


Paper statistics
Abstract Views: 791
Downloads: 148
Download Rank: 130,734
References:  67
Footnotes:  18

© 2015 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo1 in 0.297 seconds