Two-Period Model of Bank Lending Channel: Basel II Regulatory Constraints

Basel II and Required Bank Capital

The Bank Lending Channel in Chile

role of credit in the economy by suggesting that the capital structure of the firm was mostly irrelevant. Moreover, the strong and robust correlation between money and real variables found in the empirical literature of the 1960s provided strong support for the view that the main transmission mechanism for monetary policy operates through changes in the cost of capital and their impact on inves...

Bank Portfolios and the Bank Lending Channel in Austria

This paper analyzes the adjustments in the structure of assets and liabilities of the Austrian banking sector taking place after a monetary tightening. Following increases in short-term interest rates, the share of loans to non-banks in interest-earning assets rises, which is at odds with predictions from the bank lending channel of monetary policy transmission. An extension of credit to nonfin...

Effects of Capital-Asset Constraints on Commercial Bank Lending

The U.S. experienced a sharp decline in commercial bank lending from 1990 to 1992. This particular event has caught the attention of many scholars because it is often blamed as one of the factors that led to a failure of a speedy recovery from the ongoing recession. This issue remains controversial because debate exists on whether the credit decline was due to a reduction in supply or to a redu...

Liquidation, Asset Prices and the Recycling Channel of Bank Lending

This paper investigates the e¤ects on the asset market of bank actions in dealing with their non-performing loans. It is demonstrated that liquidation of bad loans may not be as detrimental to asset prices as commonly argued, because funds recouped from liquidation can be recycled into new loans which support the asset market. While capital regulation protects the health of banks, it may limit ...