Balance Sheet Strength And Bank Lending During The Global Financial Crisis

Author : Mr.Tümer Kapan
Publisher : International Monetary Fund
ISBN 13 : 1484315847
Total Pages : 38 pages
Book Rating : 4.42/5 ( download)

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Download or read book Balance Sheet Strength and Bank Lending During the Global Financial Crisis written by Mr.Tümer Kapan and published by International Monetary Fund. This book was released on 2013-05-08 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the role of bank balance sheet strength in the transmission of financial sector shocks to the real economy. Using data from the syndicated loan market, we exploit variation in banks’ reliance on wholesale funding and their structural liquidity positions in 2007Q2 to estimate the impact of exposure to market freezes during 2007–08 on the supply of bank credit. We find that banks with strong balance sheets were better able to maintain lending during the crisis. In particular, banks that were ex-ante more dependent on market funding and had lower structural liquidity reduced the supply of credit more than other banks. However, higher and better-quality capital mitigated this effect. Our results suggest that strong bank balance sheets are key for the recovery of credit following crises, and provide support for regulatory proposals under the Basel III framework.

Author : Tümer Kapan
Publisher :
ISBN 13 :
Total Pages : 48 pages
Book Rating : 4.70/5 ( download)

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Download or read book Balance Sheet Strength and Bank Lending During the Global Financial Crisis written by Tümer Kapan and published by . This book was released on 2016 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the role of bank balance sheet strength in the transmission of financial sector shocks to the real economy. Using data from the syndicated loan market, we exploit variation in banks' reliance on wholesale funding and their structural liquidity positions in 2007Q2 to estimate the impact of exposure to market freezes during 2007-08 on the supply of bank credit. We find that banks with strong balance sheets were better able to maintain lending during the crisis. In particular, banks that were ex ante more dependent on market funding and had lower structural liquidity reduced the supply of credit more than other banks. However, higher levels of better-quality capital mitigated this effect. Our results suggest that strong bank balance sheets are key for the recovery of credit following crises, and provide support for regulatory proposals under the Basel III framework.

Author : Tümer Kapan
Publisher :
ISBN 13 : 9783865589521
Total Pages : 38 pages
Book Rating : 4.29/5 ( download)

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Download or read book Balance Sheet Strength and Bank Lending During the Global Financial Crisis written by Tümer Kapan and published by . This book was released on 2013 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Author : Tumer Kapan
Publisher :
ISBN 13 :
Total Pages : 49 pages
Book Rating : 4.46/5 ( download)

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Download or read book Balance Sheet Strength and Bank Lending written by Tumer Kapan and published by . This book was released on 2018 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: We use the 2007-2008 financial crisis as a lens to study the link between banks' financial health and the strength of transmission of financial sector shocks to the real economy. We find that banks with ex-ante stronger balance sheets, in particular higher levels of common equity, were better able to maintain credit supply when faced with liquidity shocks during the crisis. One mechanism behind this effect was that banks in better financial health experienced a lower cost of funds. Bank recapitalizations mitigated the lending gap between high and low capital banks, but only in countries with strong sovereigns. Firms that borrowed from low capital banks had worse economic performance during the crisis, in terms of lower asset growth, sales growth, and investment. These findings support the view that strong financial intermediary balance sheets are key for the recovery of credit and economic performance after large financial sector shocks.

Author : Joseph Crowley
Publisher : International Monetary Fund
ISBN 13 : 1484327063
Total Pages : 54 pages
Book Rating : 4.67/5 ( download)

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Download or read book Central and Commercial Bank Balance Sheet Risk Before, During, and After the Global Financial Crisis written by Joseph Crowley and published by International Monetary Fund. This book was released on 2015-02-27 with total page 54 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper presents an overview of exposures in the balance sheets of central banks, banks, and other depository institutions during the past decade, with emphasis on asset growth and currency composition. It exploits the IMF’s SRF-based monetary data to show: (i) there was a widely observed buildup of assets prior to the global financial crisis, but there has been no significant reduction in its wake; (ii) the foreign currency composition of the balance sheets of banks and other depository institutions remained remarkably constant in spite of the crisis, significant changes in the composition of balance sheets, and globalization, and does not seem to have been significantly influenced by the behavior of exchange rates; and (iii) exposure to households increased prior to the crisis, but this increased risk was offset by increased capitalization.

Author : Mr.Jiaqian Chen
Publisher : International Monetary Fund
ISBN 13 : 1475599161
Total Pages : 28 pages
Book Rating : 4.69/5 ( download)

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Download or read book Bank Balance Sheets and the Value of Lending written by Mr.Jiaqian Chen and published by International Monetary Fund. This book was released on 2017-05-08 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study 1,400 UK syndicated loans, together with the financial history of the lead bank and the borrowing firm. We interpret abnormal equity returns around loan announcements as the value of the lending relationship to the firm. We find that: (i) Consistent with previous evidence, the value of lending is higher when the firm is riskier or more opaque, suggesting that it primarily reflects the lead bank’s screening and monitoring activities. (ii) As a bank becomes larger, more profitable or more capitalized, the value of its loans first increases and then decreases. The largest, most capitalised or most profitable banks do not give the most valuable loans. (iii) Firms which receive low-value loans are more likely to experience low profitability and financial distress during the lending relationship. By relating the state of bank balance sheets to borrower performance, we offer a new angle to evaluate the impact of financial conditions on the real economy.

Author : Nicola Cetorelli
Publisher : DIANE Publishing
ISBN 13 : 1437933874
Total Pages : 41 pages
Book Rating : 4.71/5 ( download)

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Download or read book Global Banks and International Shock Transmission written by Nicola Cetorelli and published by DIANE Publishing. This book was released on 2010-11 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: Global banks played a significant role in transmitting the 2007-09 financial crisis to emerging-market (EM) economies. The authors examine adverse liquidity shocks on main developed-country banking systems and their relationships to EM across Europe, Asia, and Latin Amer., isolating loan supply from loan demand effects. Loan supply in EM across Europe, Asia, and Latin Amer. was affected significantly through three separate channels: (1) a contraction in direct, cross-border lending by foreign banks; (2) a contraction in local lending by foreign banks¿ affiliates in EM; and (3) a contraction in loan supply by domestic banks, resulting from the funding shock to their balance sheets induced by the decline in interbank, cross-border lending. Charts and tables.

Author : Mr.Luc Laeven
Publisher : International Monetary Fund
ISBN 13 : 1451873549
Total Pages : 43 pages
Book Rating : 4.42/5 ( download)

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Download or read book Accounting discretion of banks during a financial crisis written by Mr.Luc Laeven and published by International Monetary Fund. This book was released on 2009-09-01 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper shows that banks use accounting discretion to overstate the value of distressed assets. Banks' balance sheets overvalue real estate-related assets compared to the market value of these assets, especially during the U.S. mortgage crisis. Share prices of banks with large exposure to mortgage-backed securities also react favorably to recent changes in accounting rules that relax fair-value accounting, and these banks provision less for bad loans. Furthermore, distressed banks use discretion in the classification of mortgage-backed securities to inflate their books. Our results indicate that banks' balance sheets offer a distorted view of the financial health of the banks.

Author : B. Winkler
Publisher : Springer
ISBN 13 : 1137352981
Total Pages : 326 pages
Book Rating : 4.89/5 ( download)

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Download or read book A Flow-of-Funds Perspective on the Financial Crisis Volume I written by B. Winkler and published by Springer. This book was released on 2013-11-29 with total page 326 pages. Available in PDF, EPUB and Kindle. Book excerpt: Provides a comprehensive overview of a broad range of uses of the flow of funds within the central bank community as well as in the academic field, prepared by international experts in the field. Based on the crisis experience, it offers an overview of lessons for macrofinancial analysis and financial stability.

Author : Paul Langley
Publisher :
ISBN 13 : 0199683786
Total Pages : 235 pages
Book Rating : 4.89/5 ( download)

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Download or read book Liquidity Lost written by Paul Langley and published by . This book was released on 2015 with total page 235 pages. Available in PDF, EPUB and Kindle. Book excerpt: The interventions of crisis management during the 2007 to 2011 financial crisis were not simply responses to a set of given developments in markets, banking or neo-liberal capitalism. Nor can those interventions be adequately explained as the actions of sovereign state officials and institutions. Instead, Langley argues, processes of crisis governance are shown to have established six principal technical problems to be acted upon: liquidity, toxicity, solvency, risk, regulation, and debt and that the governance of these technical problems, is shown to have been strategically assembled in order to secure the continuation of a particular, financialized way of life that depends upon global financial circulations. Contributing to interdisciplinary debates in cultural economy and the social studies of finance, and grounded in extensive empirical research, this book offers an innovative analysis of how the contemporary global financial crisis was governed. Through an exploration of the interventions made by central banks, treasuries, and regulatory authorities in the Anglo-American heartland of the crisis between 2007 and 2011, experimental and strategic apparatuses of crisis governance are shown to have emerged. These discrete apparatuses established the six technical problems to be acted upon, but also shared certain proclivities and preferences. Crisis governance assembled discourses and devices of economy in relation with sovereign monetary, fiscal, and regulatory techniques, and elicited an affective atmosphere of confidence. It also sought to secure the financialized way of life which turns on the opportunities ostensibly afforded by uncertain financial circulations, and gave rise to post-crisis technical fixes designed to advance the resilience of banking and the macro-prudential regulation of financial stability. Thus, the consensus that prevails across economics, political economy, and beyond - wherein sovereign state institutions are cast as coming to the rescue of the markets, banking, or neo-liberal capitalism - conceals a great deal more than it reveals about the governance of the global financial crisis.