Monetary Policy, Bank Lending, and the Risk‐Pricing Channel

Kishan, Ruby P.; Opiela, Timothy P.

doi:10.1111/j.1538-4616.2012.00502.x

Cited by 41 publications

(21 citation statements)

References 45 publications

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“…To shed more light on the underlying sources of these heterogeneous responses, we analyse the development of the interest rates banks pay on jumbo certificates of deposits (jumbo CDs) as a proxy for external finance premia (see, for example, Kishan and Opiela ). We find that jumbo CD rates are significantly lower for more liquid banks after surges in uncertainty.…”

Section: Introductionmentioning

confidence: 99%

Do Banks Lend Less in Uncertain Times?

Raunig

Scharler

Sindermann³

2016

Economica

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We study the development of bank lending in the U.S. after four large jumps in uncertainty using an event study approach. We find that more liquid banks reduce lending less than banks with smaller liquidity ratios after a surge in uncertainty. Lending by smaller banks is also less responsive to increases in uncertainty. Banks with a higher capitalization ratio keep up lending to a greater extent, but the effect is only significant for banks which are not part of a multi-bank holding company. This heterogeneity across banks suggests that declines in bank lending following increases in uncertainty are partly the result of a reduced supply of bank loans.

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Section: Introductionmentioning

confidence: 99%

Do Banks Lend Less in Uncertain Times?

Raunig

Scharler

Sindermann³

2016

Economica

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“…Since bank interest rates could be sluggish in adjusting, we analyze the interest rates on overdraft loans (i.e., credit lines) that are standard contracts modified unilaterally and at very short notice by banks; this allows us to fully capture in our quarterly data the effects of the shocks in the interbank market or a change in banks’ behavior due to a repricing of credit risk (Kishan and Opiela ). Moreover, as we investigate the changes in loan interest rates over the horizon 2008:q2–2010:q1, we may reasonably argue that the repricing of credit risk that followed the Lehman default is fully accounted for in our sample…”

mentioning

confidence: 99%

Bank Heterogeneity and Interest Rate Setting: What Lessons Have We Learned since Lehman Brothers?

Gambacorta¹,

Mistrulli²

2014

J of Money Credit Banking

191

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A substantial literature has investigated the role of relationship lending in shielding borrowers from idiosyncratic shocks. Much less is known about how lending relationships and bank‐specific characteristics affect the functioning of the credit market in an economy‐wide crisis. We investigate how bank and bank–firm relationship characteristics have influenced interest rate setting since the collapse of Lehman Brothers. We find that interest rate spreads increased by less for those borrowers having closer lending relationships. Furthermore, firms borrowing from banks endowed with large capital and liquidity buffers and from banks engaged mainly in traditional lending were kept more insulated from the financial crisis.

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“…low interest rates) and the risk-taking by banks where expansionary monetary policies generate a decrease in risk aversion as a result of lower requirements stipulated for offering loans. Kishan and Opiela (2012) report that these positions trigger more marked declines in loans offered by risk takers in case of a tight monetary policy.…”

Section: Literature Reviewmentioning

confidence: 99%

The bank lending channel of monetary policy : does the financial structure of banks matter

Gómez-González¹,

Kutan²,

Ojeda-Joya³

et al. 2016

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This paper tests the importance of the financial structure of banks in the bank lending channel of monetary policy transmission in Colombia, using an unbalanced panel of 51 banks for the period of 1996:4-2014:8. We find that an increase in the interbank rate (proxy of the intervention rate) has a response of a drop in the growth of the total loan portfolio of banks. When we breakdown by type of policy, the bank lending channel works better in times of monetary contraction, exhibiting significant reactions from banks with low levels of solvency rather than those with high solvency. In contrast, when the policy is expansionary, the high solvency banks are the only segment exhibiting the presence of the bank lending channel. We discuss the policy implications of findings.

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Monetary Policy, Bank Lending, and the Risk‐Pricing Channel

Cited by 41 publications

References 45 publications

Do Banks Lend Less in Uncertain Times?

Do Banks Lend Less in Uncertain Times?

Bank Heterogeneity and Interest Rate Setting: What Lessons Have We Learned since Lehman Brothers?

The bank lending channel of monetary policy : does the financial structure of banks matter

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