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

Author/Editor: Cyril Pouvelle
Publication Date: April 01, 2012
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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.
Series: Working Paper No. 12/103
Subject(s): Bank credit | Banks | Corporate sector | Credit demand | Credit expansion | Economic models | Financial stability | Household credit | Housing prices

Author's Keyword(s): Credit growth | asset prices | financial stability
Publication Date: April 01, 2012
ISBN/ISSN: 9781475502930/1018-5941 Format: Paper
Stock No: WPIEA2012103 Pages: 40
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