Bank Capital And Lending Behaviour: Empirical Evidence For Italy

Provided by: Centre de Recerca en Economia Internacional - CREI
Topic: Software
Format: PDF
This paper investigates the existence of cross-sectional differences in the response of lending to monetary policy and GDP shocks owing to a different degree of bank capitalization. First, it considers a measure of capitalization (the excess capital) that is better able to control for the riskiness of banks' portfolios than the well-known capital-to-asset ratio. Second, it disentangles the effects of the "Bank lending channel" from those of the "Bank capital channel" in the case of a monetary shock; it also provides an explanation for asymmetric effects of GDP shocks on lending based on the link bank capital and risk aversion.

Find By Topic