Bank Losses, Monetary Policy and Financial Stability—Evidence on the Interplay from Panel Data
IMF Working Papers, September 1, 2008
Source details
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- Bank Losses, Monetary Policy and Financial Stability—Evidence on the Interplay from Panel Data
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Bibliographic details
- Authors: Lea Zicchino, Erlend Nier
- Published: September 1, 2008
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451870909.001
Summary findings
- Losses lead to a reduction in credit to companies and households.
- The reduction in credit due to losses is more pronounced when either initial bank capitalization is thin or when monetary policy is tight.
- Ample capital is more important in cushioning the effect of loan losses when monetary policy is tight.
- Capital buffers and accommodating monetary policy act as substitutes in offsetting the adverse effect of losses on loan growth.
- Most effects are stronger in crisis times, but they operate both in and outside full-blown banking crises.
- These findings have important implications for the interplay between financial stability and monetary policy.
Data and scope
- Dataset: unique cross-country dataset of more than 600 banks from 32 countries.
- Publication type: IMF Working Papers.
- Pages: 30
- Volume: 2008
- Issue: 232
- Series: Working Paper No. 2008/232
Keywords and subjects
- Subject: Bank credit, Banking, Banking crises, Credit, Loans
- Keywords: bank capital channel, lending response, loan growth, loan loss, monetary policy indicator, WP
Publication identifiers
- DOI: https://doi.org/10.5089/9781451870909.001
- Stock No: WPIEA2008232
- ISBN: 9781451870909
- ISSN: 1018-5941
Source: IMF Working Paper "Bank Losses, Monetary Policy and Financial Stability—Evidence on the Interplay from Panel Data" by Lea Zicchino and Erlend Nier, September 1, 2008.