Bank Lending in the Knowledge Economy

52 Pages Posted: 17 Dec 2016 Last revised: 11 Jun 2018

See all articles by Giovanni Dell'Ariccia

Giovanni Dell'Ariccia

International Monetary Fund (IMF) - Research Department; Centre for Economic Policy Research (CEPR)

Dalida Kadyrzhanova

Georgia State University

Camelia Minoiu

Federal Reserve Board

Lev Ratnovski

International Monetary Fund

Multiple version iconThere are 3 versions of this paper

Date Written: June 2, 2018

Abstract

We study bank portfolio allocations during the transition of the real sector to a knowledge economy in which firms increasingly use intangible assets. We show that higher corporate investment in intangible assets slows down banks' commercial lending. Banks reallocate the resulting lending capacity to other assets, notably mortgages. The findings are consistent with financial intermediation frictions due to lower collateral value of corporate intangible assets. Additional tests rule out alternative explanations such as higher mortgage demand. We estimate that higher corporate intangible assets conservatively explain 25-40% of the decline in bank commercial lending since the mid-1980s.

Keywords: corporate intangible assets, bank lending, commercial loans, real estate loans

JEL Classification: E22, E44, G21

Suggested Citation

Dell'Ariccia, Giovanni and Kadyrzhanova, Dalida and Minoiu, Camelia and Ratnovski, Lev, Bank Lending in the Knowledge Economy (June 2, 2018). 28th Annual Conference on Financial Economics and Accounting. Available at SSRN: https://ssrn.com/abstract=2886694 or http://dx.doi.org/10.2139/ssrn.2886694

Giovanni Dell'Ariccia

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States
202-623-8135 (Phone)
202-623-4352 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Dalida Kadyrzhanova

Georgia State University ( email )

J Mack Robinson College of Business
35 Broad St, 12th Floor
Atlanta, GA 30303-3083
United States

Camelia Minoiu (Contact Author)

Federal Reserve Board ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Lev Ratnovski

International Monetary Fund ( email )

700 19th Street, N.W.
Washington, DC 20431
United States
+1 202 623 8213 (Phone)

HOME PAGE: http://ratnovski.googlepages.com

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