59 research outputs found
Unnecessary Injury: The Economic Costs of Imposing New Global Capital Requirements on Large U.S. Property and Casualty Insurers
The effect of nonperforming loans on credit expansion: do capital and profitability matter? Evidence from European banks
We examine whether the effect of NPLs on bank credit growth differs depending upon the level of bank capital and profitability in a panel of up to 521 banks from 28 European countries. Our main finding is that there is a significant positive interaction effect of NPLs and bank capital and NPLs and profitability on the supply of bank credit. Thus, whether NPLs impede the monetary policy transmission mechanism depends substantially on whether or not banks are sufficiently capitalized and profitable. Policy actions aimed at reducing NPLs to sustain bank credit should protect bank capital and profitability if they are to be effective, including by supporting efforts that aim at returning NPLs to good standing
How does monetary policy respond to the dynamics of the shadow banking sector?
We investigate the response of the central bank to the change in size of non-bank financial
intermediaries. Using quarterly data for the U.S. over the period 1946:Q1-2016Q4, we find that
when faced with an increase in the asset growth of the securities' brokers and dealers and the
shadow banking sector, the monetary authority reacts by raising the short-term nominal interest
rate. This response is stronger in the case of sharp variation in the size of the balance sheet of nonbank financial intermediaries. From a policy perspective, our study suggests that an extended
version of the original Taylor rule - embedding both price stability and financial stability concerns –
provides a good characterisation of the monetary policy reaction function
The effect of non‐performing loans on credit expansion: Do capital and profitability matter? Evidence from European banks
Do macroprudential policy instruments reduce the procyclical impact of capital ratio on bank lending? Cross-country evidence
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