Capital ratios and bank lending: A matched bank approach

Carlson, Mark A.; Shan, Hui; Warusawitharana, Missaka

doi:10.1016/j.jfi.2013.06.003

Cited by 201 publications

(88 citation statements)

References 32 publications

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“…As mentioned earlier, Kishan and Opiela (), Carlson, Shan, and Warusawitharana (), and Jayaratne and Morgan () provide theoretical and empirical justifications for why capital ratios should matter. Their arguments begin with the notion that banks are relatively opaque, and the adverse selection problems associated with this opaqueness leads to a premium on risky bank liabilities.…”

Section: Resultsmentioning

confidence: 92%

The Impact of FHLB Advances on Bank Holding Company Lending Over the Credit Cycle

Brewer

Jackson

Mondschean

2018

J of Financial Research

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We examine the sensitivity of bank holding company loan growth to the growth in funding obtained through the Federal Home Loan Bank (FHLB) advances program. FHLB advances are a low‐cost funding source that banking organizations may substitute for funds drawn out of the financial system during periods of tight monetary policy or financial stress. This may be especially relevant for community banking organizations that have relatively less access to wholesale funding sources. Our findings show that FHLB advances provide banking organizations with some liquidity protection that reduces the impact of financial market distress and tight monetary policy on loan growth.

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Section: Resultsmentioning

confidence: 92%

The Impact of FHLB Advances on Bank Holding Company Lending Over the Credit Cycle

Brewer

Jackson

Mondschean

2018

J of Financial Research

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“…However, the effects are shown to vary across firms and over time. Carlson et al (2013) find related results for a dataset of U.S. banks matched by geography and other business characteristics. 29 See Bazelon & Smetters (1999) for a discussion of the discount rates that should be applied for public policy projects.…”

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confidence: 75%

Calibrating Macroprudential Policy to Forecasts of Financial Stability

Brave¹,

López²

2018

ERWP

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The introduction of macroprudential responsibilities at central banks and financial regulatory agencies has created a need for new measures of financial stability. While many have been proposed, they usually require further transformation for use by policymakers. We propose a transformation based on transition probabilities between states of high and low financial stability.Forecasts of these state probabilities can then be used within a decisiontheoretic framework to address the implementation of a countercyclical capital buffer, a common macroprudential policy. Our policy simulations suggest that given the low probability of a period of financial instability at year-end 2015, U.S. policymakers need not have engaged this capital buffer.

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“…Furthermore, [6] examine the effect of capital ratio to the bank lending over the period 2001 to 2011 using a matching method. Their finding shows that the higher the actual capital will make the growth of loan stronger.…”

Section: Overview Of Indonesian Banksmentioning

confidence: 99%

Lending Behavior of Indonesian Banks

Isthika

Pratiwi

2017

adv sci lett

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The main banking activity basically is taking deposits from the surplus unit and lends it to deficit units, or in other words banks will act as financial intermediaries. In lending activities banks are faced with credit risks. Thus, this paper is examining the determinants of lending behavior in Indonesian banks. This paper uses lagged loans, deposits, capital, non-performing loans, and bank size as determinant variables on lending behavior of Indonesian banks. The data are taken from financial performance of 30 Indonesian banks listed on the Indonesia Stock Exchange from the year of 2011, 2012 and 2013. The model developed in this research is an ordinary least squares method using SPSS software. The result proved that there is no empirical evidence shows that lending behavior of Indonesian banks is influenced by the amount of deposits, non-performing loans, and bank size. Whereas, there is significant evidence shows that lagged loans and capital do influence the lending behavior of Indonesian banks. This indicates that Indonesian banks are making the decision of lending activities based on the previous loans and capital owned by the banks. Capital could be used by the banks to cover the unavoidable losses, therefore it affects the decision making by the Indonesian banks in regards to the lending activities.

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Capital ratios and bank lending: A matched bank approach

Cited by 201 publications

References 32 publications

The Impact of FHLB Advances on Bank Holding Company Lending Over the Credit Cycle

The Impact of FHLB Advances on Bank Holding Company Lending Over the Credit Cycle

Calibrating Macroprudential Policy to Forecasts of Financial Stability

Lending Behavior of Indonesian Banks

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