Title: Internal Funds and the Supply of Bank Loans
Abstract:We investigate the effect of profits on the supply of bank loans using an international panel of over 500 banks in 21 different countries for the years 1991-2003. We find strong evidence in favour of ...We investigate the effect of profits on the supply of bank loans using an international panel of over 500 banks in 21 different countries for the years 1991-2003. We find strong evidence in favour of the inventory hypothesis of bank capital relative to the opaque bank hypothesis for English speaking and Scandinavian countries; indicating that large and statistcially significant impacts of bank profits on loan supply can arise for any bank that becomes capital constrained, whether large or small. We also report evidence of substantial differences in behaviour for European and Japanese banks. We conclude that bank loan supply can have a major impact on both monetary transmission and financial stability during periods when bank capital ratios fall below normal levels.Read More
Publication Year: 2004
Publication Date: 2004-01-01
Language: en
Type: article
Indexed In: ['crossref']
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Cited By Count: 1
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