Rescue Packages and Bank Lending

31 Pages Posted: 18 Nov 2011

See all articles by Michael Brei

Michael Brei

Université Paris Ouest - Nanterre, La Défense - EconomiX

Leonardo Gambacorta

Bank for International Settlements (BIS); Centre for Economic Policy Research (CEPR)

Goetz von Peter

Bank for International Settlements - Research and Policy Analysis

Multiple version iconThere are 2 versions of this paper

Date Written: November 1, 2011

Abstract

This paper examines whether the rescue measures adopted during the global financial crisis helped to sustain the supply of bank lending. The analysis proposes a setup that allows testing for structural shifts in the bank lending equation, and employs a novel dataset covering large international banks headquartered in 14 major advanced economies for the period 1995-2010. While stronger capitalisation sustains loan growth in normal times, banks during a crisis can turn additional capital into greater lending only once their capitalisation exceeds a critical threshold. This suggests that recapitalisations may not translate into greater credit supply until bank balance sheets are sufficiently strengthened.

Keywords: bank lending channel, monetary policy, financial crisis, rescue packages, recapitalisation

JEL Classification: E44, G01, G21

Suggested Citation

Brei, Michael and Gambacorta, Leonardo and von Peter, Goetz, Rescue Packages and Bank Lending (November 1, 2011). BIS Working Paper No. 357. Available at SSRN: https://ssrn.com/abstract=1959409

Michael Brei

Université Paris Ouest - Nanterre, La Défense - EconomiX ( email )

200 Avenue de la République
Nanterre cedex, Nanterre Cedex 92000
France

Leonardo Gambacorta (Contact Author)

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
Basel, Basel-Stadt 4002
Switzerland

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Goetz Von Peter

Bank for International Settlements - Research and Policy Analysis ( email )

CH-4002 Basel, Basel-Stadt
Switzerland
+ 41 61 280 8840 (Phone)

HOME PAGE: http://www.bis.org/author/goetz_von_peter.htm

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