Why do bank loans react with a delay to shifts in interest rates? A bank capital explanation

• Type: Article in International Scientific Journal
• Date: 2009

Authors

José Jorge (Author) FEP

Journal

Title: Economic Modelling

Vol. 26 No. 5

Pages: 799-806

ISSN: 0264-9993

Publisher: Elsevier

Indexing

ISI Web of Knowledge - 5 Citations

ISI Web of Science

Scopus - 5 Citations

Scientific classification

CORDIS: Social sciences > Economics > Banking ; Social sciences > Economics

FOS: Social sciences > Economics and Business

Other information

Authenticus ID: P-003-G11

DOI: 10.1016/j.econmod.2009.01.003

Abstract (EN): We advance an explanation for the delay in the response of the volume of bank loans to innovations in monetary policy. Capital requirements may effectively tie the evolution of bank credit to the evolution of bank equity. By uncovering a new mechanism by which shifts in interest rates affect the profitability of the banking sector, and in turn its equity. we find that the resulting movements in the amount of aggregate loans are consistent with the regularities observed in the data.

Language: English

Type (Professor's evaluation): Scientific

No. of pages: 8