Empirical evidence demonstrates that credit standards, including lending margins and collateral requirements, move in a countercyclical direction. In this study, we construct small open economy model with financial frictions to generate the movement standards. Our analysis fluctuations standards work as an amplifier of shocks economy. particular, existence endogenous increases output volatility...

Rationale. This article summarises the main results of Bank Lending Survey for 2022 Q4 and expectations 2023 Q1. It also analyses matters related to funding market access impact other factors on responding banks’ lending policy. Takeaways. •According Survey, in credit standards tightened across board Spain third consecutive quarter. •Loan demand fell two household segments (house purchase consu...

This paper studies bank loans over the business cycles in Iran to determine the role of Iranian banks in stabilizing credit. By estimating the long-run relations using dynamic OLS and fully modified OLS estimators, the findings show that real bank lending is positively related to real GDP in the long-run providing evidences of the pro-cyclicality of bank lending in Iran. Hence, Iranian banking ...

A widespread opinion before the credit crisis of 2007/8 was that securitisation enhances financial stability by dispersing credit risk. After the credit crisis, securitisation was blamed for allowing the hot potato of bad loans to be passed to unsuspecting investors. Both views miss the endogeneity of credit supply. Securitisation enables credit expansion through higher leverage of the financia...

This paper examines whether fair value accounting increases the pro-cyclicality of banks’ lending behavior. Exploiting cross-sectional variation in individual banks’ exposure to fair value accounting, I find that fair value accounting does not exacerbate the pro-cyclicality of bank lending over the past two business cycles during 1995-2010. This result holds despite the fact that every one doll...

Abstract This paper investigates whether innovative Peer-to-Peer lending by FinTechs’ has a regulatory advantage over the big banks in respect of small business lending. We do this through lens regulations imposed Dodd-Frank Act, using difference-in-difference methodology. The Act tightened traditional bank credit standards on loans, especially for firms. However, new FinTech lenders were not s...

Is a state ever truly insulated from interest group influence, or is state insulation conditional under the best of circumstances? While Huang (1995) attributes relatively low inflation in China to political discipline of the Chinese communists, the banking sector has slowly fallen into quagmire. While harsh retrenchments succeeded in lowering inflation, each monetary expansion brought the Chin...

What are the macroeconomic consequences of changing aggregate lending standards in residential mortgage markets, as measured by loan-to-value (LTV) ratios? Using a structural VAR, we find that GDP and business investment increase following an expansionary LTV shock. Residential investment, by contrast, falls, a result that depends on the systematic reaction of monetary policy. We show that, in ...