Bank Risk and Monetary Policy

By Yener Altunbaş, L. Gambacorta, David Marqués-Ibáñez. Social Science Research Network, 2010

465 citations recorded by the source corpus.

We find evidence of a bank lending channel for the euro area operating via bank risk. Financial innovation and the new ways to transfer credit risk have tended to diminish the informational content of standard bank balance-sheet indicators. We show that bank risk conditions, as perceived by financial market investors, need to be considered, together with the other indicators (i.e. size, liquidity and capitalization), traditionally used in the bank lending channel literature to assess a banki?½s ability and willingness to supply new loans. Using a large sample of European banks, we find that banks characterized by lower expected default frequency are able to offer a larger amount of credit and to better insulate their loan supply from monetary policy changes.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/747a3fbec9f3465661dba4828b6e5ee0a362c82d

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Citations in the corpus

The Bank Lending Channel: Lessons from the Crisis (2011, unknown): “This result is consistent with the view of securitisation as a source of capital relief and additional funding that can be used by banks to grant additional loans (Altunbas et al., 2009a).”