Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5091643 | Journal of Banking & Finance | 2006 | 27 Pages |
Abstract
Utilizing a bank-lending channel framework, we investigate the effects of expansionary and contractionary policy separately on the loan behavior of low-capital and high-capital banks, and between pre-Basel/FDICIA and post-Basel/FDICIA periods. Our results show that low-capital banks are adversely affected by contractionary policy. Expansionary policy, however, is not effective in stimulating the loan growth of low-capital banks. These results are consistent with lending channel predictions, but only hold in the post-Basel/FDICIA period when the capital constraint is stringent relative to the pre-Basel/FDICIA period. These asymmetric policy results have implications for the interaction of monetary and capital regulatory policies.
Related Topics
Social Sciences and Humanities
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Authors
Ruby P. Kishan, Timothy P. Opiela,