This paper examines the impact of business cycles and monetary policy on bank loan supply. To this end, we use a unique firm-bank match-level dataset covering listed firms in Japan that allows us to control for firms’ time-varying unobservable loan demand and endogenous bank-firm matching, so that we can identify the effects of business cycles and monetary policy on loan supply through the bank...

It is well known that conflicts of interests between borrowers and creditors can raise the cost of external financing. In this paper we provide new evidence that borrower-creditor conflicts of interests also affect the sensitivity of debt financing to aggregate business conditions. In the presence of incomplete contracts, creditors cannot fully observe or verify diversion of free cash flow by b...

The study empirically examines the impact of bank diversification on monetary policy transmission through lending channel. Based and bank-level data from 2008 to 2018 in Vietnam, a diverse environment tools, results show that significantly drives channel different ways. Using changes rates as indicators, posits strong evidence indicate becomes weaker banks get more involved non-traditional acti...

to emerge in the Philippines. After being in the wholesale microfinance lending business for two years, BanKO (which is licensed as a savings and thrift bank) was ready to jump into retail microfinance by using the mobile phone as its main channel. With years of experience at Bank of the Philippine Islands (BPI), Chief Executive Officer (CEO) Teresita Tan knew all too well the high cost of bran...

This paper discusses two ways to amend the optimal lending contract under asymmetric information studied in Clementi and Hopenhayn (2006) to change its long-run implications so that firm growth and exit driven by borrowing constraints exist in the long run. One way assumes that the entrepreneur has a lower discount factor than the bank, and the other assumes the bank has limited commitment. The...

Cross-border bank lending dropped sharply during the financial crisis. This feature uses a panel regression framework to analyse the key drivers of cross-border bank lending to 21 emerging market economies between 1995 and 2009. The analysis suggests that both demand and supply factors contributed to the fall, but the impact of supply was stronger. The two factors seem to have had more balanced...

This paper seeks to explain the role of bank capital in uctuations of lending and output. We build a continuous time model of an economy in which commercial banks nance their loans by deposits and equity, while facing issuance costs when they raise new equity. The dynamics of the loan rate and the volume of lending in the economy are driven by aggregate bank capitalization. The model has a uniq...

We study how monetary policy affects the funding composition of banking sector. When tightening reduces supply retail deposits, banks attempt to substitute wholesale for deposit outflows smooth their lending. Because financial frictions, have varying degrees access funding. Therefore, large banks, or those with greater reliance on funding, increase more. Consequently, increases both and concent...