Bank risk and monetary policy

Yener Altunbas, Leonardo Gambacorta and David Marques-Ibanez

Journal of Financial Stability, 2010, vol. 6, issue 3, 121-129

Abstract: We find evidence of a bank lending channel operating in the euro area via bank risk. Financial innovation and the wider use of new ways of transferring credit risk have tended to diminish the informational content of standard bank balance sheet indicators. We show that bank risk conditions, as perceived by financial market investors, need to be considered, together with the other indicators (i.e., size, liquidity and capitalization), traditionally used in the bank lending channel literature to assess banks' ability and willingness to supply new loans. Using a large sample of European banks, we find that banks characterized by lower expected default frequency are able to offer a larger amount of credit and to better insulate their loan supply from monetary policy changes.

Keywords: Bank; Risk; Bank; lending; channel; Monetary; policy (search for similar items in EconPapers)
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (308)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1572-3089(09)00036-9
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Bank risk and monetary policy (2009)
Working Paper: Bank risk and monetary policy (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:finsta:v:6:y:2010:i:3:p:121-129

Access Statistics for this article

Journal of Financial Stability is currently edited by I. Hasan, W. C. Hunter and G. G. Kaufman

More articles in Journal of Financial Stability from Elsevier
Bibliographic data for series maintained by Catherine Liu ().