Bank Lending in the Knowledge Economy

IMF Working Papers, November 7, 2017

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Bank Lending in the Knowledge Economy

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Bibliographic details

• Authors: Giovanni Dell'Ariccia, Dalida Kadyrzhanova, Camelia Minoiu, Lev Ratnovski
• Published: November 7, 2017
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781484324899.001

Authors and publication

• Giovanni Dell'Ariccia, Dalida Kadyrzhanova, Camelia Minoiu, Lev Ratnovski
• November 7, 2017
• IMF Working Papers, Volume: 2017, Issue: 234, Working Paper No. 2017/234
• Pages: 45
• DOI: https://doi.org/10.5089/9781484324899.001
• ISBN: 9781484324899
• ISSN: 1018-5941

Research question and context

• Study focus: how bank portfolio allocations evolve as the real sector transitions to a knowledge economy characterized by firms using less tangible capital and investing more in intangible assets.
• Core mechanism: intangible assets have lower collateral values, affecting banks' lending incentives and portfolio composition.

Key findings

• As firms shift toward intangible assets with lower collateral values, banks reallocate portfolios:
  • away from commercial loans
  • toward other assets, primarily residential real estate loans and liquid assets
• The portfolio reallocation effect is more pronounced for:
  • large banks
  • less well capitalized banks
• Robustness: the effect remains after controlling for real estate loan demand.
• Quantitative contribution:
  • Increased firm investment in intangible assets can explain up to 20% of bank portfolio reallocation from commercial to residential lending over the last four decades.

Subject areas and keywords

• Subjects: Asset allocation, Asset and liability management, Bank credit, Banking, Financial institutions, Financial statements, Intangible capital, Loans, Money, National accounts, Public financial management (PFM)
• Keywords: Asset allocation, asset growth, balance sheet, bank assets, bank capital, bank capital erosion, bank capitalization, bank characteristic, Bank credit, bank FE, bank lending, bank level, bank portfolio, bank portfolio component, bank size, capitalized bank, commercial loans, Financial statements, Global, intangible capital, liquid assets, Loans, portfolio allocation, real estate loans, WP

Policy-relevant implications (implicit in findings)

• Declining collateral value of firm assets due to intangible investment can shift bank lending toward residential real estate and liquid assets, with potential implications for:
  • credit availability for commercial firms investing in intangibles
  • systemic exposure to real estate markets
  • differential effects by bank size and capitalization that may warrant targeted supervisory attention

IMF Working Paper — Bank Lending in the Knowledge Economy (2017), Giovanni Dell'Ariccia et al.

Content in this bundle

• Bank Lending in the Knowledge Economy, WP/17/234, November 2017
  • Bank Lending in the Knowledge Economy, WP/17/234, November 2017 (Markdown version)
  • Bank Lending in the Knowledge Economy, WP/17/234, November 2017 (PDF)