This paper examines the asymmetric effects of monetary policy on output and the role of bank-lending behavior. We investigate whether contractionary and expansionary policies have asymmetric impacts on bank loans, and whether there are further differences in the response of small banks and big banks to policy actions. We also investigate the link between changes in bank lending and aggregate ec...

Article history: Received 13 October 2011 Accepted 26 December 2011 Available online 3 January 2012 This paper examines the determinants of the signaling effect of acquiring lines of credit (LCs) on borrower stock returns by testing the economic conditions and lending competitionhypotheses. The economic conditions hypothesis is tested by examining the loan cyclicality and handpicking effects. T...

The literature on microfinance has largely attributed the industry’s success to joint liability and peer monitoring, which are direct results of the group lending methodology. As individual lending has become more common in microfinance, especially in Latin America, we need to revisit the reasons for these successes. This paper uses a dynamic model with endogenously determined repayment incenti...

While bank lending may fall in response to shocks to their liquidity, to what extent are such shocks transmitted to borrowing …rms? Tracing such transmission mechanisms has proven di¢ cult in the past due to a lack of micro data linking banks to borrowing …rms and identi…cation concerns. This paper uses di¤erential liquidity shocks arising from unanticipated nuclear tests in Pakistan in 1998, a...

The systematic risk of US commercial bank stocks more than doubled from 2000 to 2006, primarily due to their increased residential mortgage exposure. Higher levels of mortgage lending produced better earnings but relatively lower stock returns. Banks engaged heavily in mortgage lending encountered less enthusiastic market response to their earnings announcements, suggesting that financial marke...

Abstract I analyse the effects of two macroprudential policy measures implemented in Switzerland: activation countercyclical capital buffer (CCyB) and a cap on loan-to-value (LTV) ratios. use difference-in-differences method to estimate these risk indicators, such as their LTV loan-to-income (LTI) ratios mortgage growth rates. find that both CCyB led reduction high mortgages. The banks affected...

This paper focuses on potential interaction between the mortgage underwriting and pricing decisions for fair lending analysis of mortgage pricing. We argue that the loan approval or denial decision determines the loan origination population and therefore the underwriting policies might affect the fair lending assessment of the subsequent pricing decisions. The paper also finds that sample selec...

Recent studies have found that banks with low capital ratios have significantly decreased their lending to the real estate sector. This correlation between real estate lending and bank capital could be the result of voluntary decisions by banks to-recapitalize, or it could be the result of direct actions taken by bank regulators. We find that banks with low capital ratios reduce their real esta...

Formal financial institutions failed to reach the poorer sections of the rural society due to informational asymmetry, moral hazard and enforcement problems. The necessity of having alternative rural credit systems which will solve the problems of rural credit institutions is clearly warranted. Micro finance institutions are seen to have characteristics that help solve the problems moral hazard...

This paper studies whether banks charge higher or lower interest rates on loans to firms with overconfident CEOs. It establishes a theoretical model to show the relationship between the loan rate and overconfidence of the borrowing firm’s CEO. It also conducts empirical analyses to test the predictions of the model. As predicted in the model, firms with overconfident CEOs enjoy lower loan rates...