Do Banks Lend Less in Uncertain Times?

30 Pages Posted: 1 Sep 2017

See all articles by Burkhard Raunig

Burkhard Raunig

Austrian National Bank - Economic Studies Division

Friedrich Sindermann

Government of Austria - Parliamentary Budget Office

Johann Scharler

University of Innsbruck

Date Written: October 2017

Abstract

We study the development of bank lending in the USA after four large jumps in uncertainty using an event study approach. We find that more liquid banks slow down and lend less after a surge in uncertainty. Lending by smaller banks is also less responsive to increases in uncertainty, which points to an increased importance of bank–customer relationships. For capitalization, we find mixed evidence. These heterogeneities across banks suggest that declines in bank lending following increases in uncertainty result at least partly from a reduced supply of bank loans.

Suggested Citation

Raunig, Burkhard and Sindermann, Friedrich and Scharler, Johann, Do Banks Lend Less in Uncertain Times? (October 2017). Economica, Vol. 84, Issue 336, pp. 682-711, 2017. Available at SSRN: https://ssrn.com/abstract=3030451 or http://dx.doi.org/10.1111/ecca.12211

Burkhard Raunig (Contact Author)

Austrian National Bank - Economic Studies Division ( email )

POB 61
Vienna, A-1011
Austria
+43 1 404 20 7219 (Phone)
+43 1 404 20 7299 (Fax)

Friedrich Sindermann

Government of Austria - Parliamentary Budget Office ( email )

Dr. Karl Renner-Ring 3
Wien, 1017
Austria

Johann Scharler

University of Innsbruck ( email )

Universitätsstraße 15
Innsbruck, Innsbruck 6020
Austria

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