Bank Lending in the Knowledge Economy

55 Pages Posted: 18 Jun 2018 Last revised: 25 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

Lev Ratnovski

International Monetary Fund; European Central Bank, Financial Research Division

Camelia Minoiu

Federal Reserve Board

Multiple version iconThere are 4 versions of this paper

Date Written: June 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: bank lending, commercial loans, corporate intangible assets, real estate loans

JEL Classification: E22, E44, G21

Suggested Citation

Dell'Ariccia, Giovanni and Kadyrzhanova, Dalida and Ratnovski, Lev and Minoiu, Camelia, Bank Lending in the Knowledge Economy (June 2018). CEPR Discussion Paper No. DP12994. Available at SSRN: https://ssrn.com/abstract=3198146

Giovanni Dell'Ariccia (Contact Author)

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

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Centre for Economic Policy Research (CEPR)

London
United Kingdom

Dalida Kadyrzhanova

Georgia State University ( email )

J Mack Robinson College of Business
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Atlanta, GA 30303-3083
United States

Lev Ratnovski

International Monetary Fund ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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

European Central Bank, Financial Research Division

Germany

Camelia Minoiu

Federal Reserve Board ( email )

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

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