Rescue Packages and Bank Lending

Posted: 26 May 2013

See all articles by Goetz von Peter

Goetz von Peter

Bank for International Settlements - Research and Policy Analysis

Leonardo Gambacorta

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

Michael Brei

Université Paris Ouest - Nanterre, La Défense - EconomiX

Multiple version iconThere are 2 versions of this paper

Date Written: 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, recapitalization

JEL Classification: E44, G01, G21

Suggested Citation

von Peter, Goetz and Gambacorta, Leonardo and Brei, Michael, Rescue Packages and Bank Lending (2011). Journal of Banking and Finance, Vol. 37, No. 2, 2013, Available at SSRN: https://ssrn.com/abstract=2269816

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

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

Michael Brei

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

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

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