Bank Credit, Asset Prices and Financial Stability: Evidence From French Banks

April 1, 2012

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Format: Chicago

Cyril Pouvelle. Bank Credit, Asset Prices and Financial Stability: Evidence From French Banks, (USA: International Monetary Fund, 2012) accessed September 20, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper analyses the effect of asset prices on credit growth in France and tries to disentangle credit demand and supply factors, both for the whole 1993-2010 period and during periods of financial instability. Using bank-level panel data at a quarterly frequency, stock price growth is shown to have a significant effect on lending growth over the whole period, but without credit supply factors being singled out. By contrast, housing price growth has a significant effect during periods of financial instability only, even after controlling for credit demand effects. These results show that credit demand factors do play a large role but also provide evidence of tighter credit constraints on households in financial instability periods.

Subject: Asset prices, Bank credit, Banking, Credit, Financial institutions, Loans, Money, Prices, Real estate prices

Keywords: Asset price, Asset prices, Bank balance, Bank balance sheet, Bank credit, Bank leverage, Credit, Credit growth, Europe, Financial stability, Growth estimation, Loans, Price, Price growth, Real estate prices, WP

Publication Details

Pages:

40
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2012/103
Stock No:

WPIEA2012103
ISBN:

9781475502930
ISSN:

1018-5941

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