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Bank Credit (bank + credit)

Distribution by Scientific Domains

Business, Economics, Finance and Accounting	84%
Humanities and Social Sciences	15%

Selected Abstracts

Does Trade Credit Substitute Bank Credit?

ECONOMIC NOTES, Issue 1 2005
Evidence from Firm-level Data
The paper examines micro data on Italian manufacturing firms' inventory behaviour to test the Meltzer (1960) hypothesis according to which firms substitute bank credit with trade credit (TC) during money tightening. We find that inventory investment of Italian manufacturing firms is constrained by their availability of TC and that this effect more than doubles during monetary restrictions. As for the magnitude of the substitution effect, however, we find that it is not sizeable. This is in line with the micro theories of TC and the evidence on actual firm practices, according to which credit terms display modest variations over time. [source]

The Determinants of Bank Credit in Industrialized Countries: Do Property Prices Matter?

INTERNATIONAL FINANCE, Issue 2 2004
Boris Hofmann
In this study, we analyse the determinants of bank credit to the private non-financial sector in 16 industrialized countries based on a cointegrating VAR. Cointegration analysis suggests that property prices are an important determinant of the long-run borrowing capacity of the private sector, which needs to be taken into account to explain the long-run movements of bank lending. Impulse response analysis reveals that innovations to property prices also have a highly significant and persistent positive dynamic effect on bank lending. This result suggests that innovations to property prices may give rise to significant and persistent cycles in bank lending and are thus a potential explanation for the persistent financial cycles observed in the past. [source]

The Effect of Bank Credit on Asset Prices: Evidence from the Japanese Real Estate Boom during the 1980s

JOURNAL OF MONEY, CREDIT AND BANKING, Issue 1 2008
NADA MORA
bank credit; asset prices; financial regulation This paper studies whether bank credit fuels asset prices. Financial deregulation during the 1980s allowed keiretsus to obtain finance publicly and reduce their dependence on banks. Banks that lost these blue-chip customers increased their property lending, and serve as an instrument for the supply of real estate loans. Using this instrument, I find that a 0.01 increase in a prefecture's real estate loans as a share of total loans causes 14,20% higher land inflation compared with other prefectures over the 1981,91 period. The timing of losses of keiretsu customers also coincides with subsequent land inflation in a prefecture. [source]

Private borrowing during the financial revolution: Hoare's Bank and its customers, 1702,241

ECONOMIC HISTORY REVIEW, Issue 3 2008
PETER TEMIN
The financial revolution improved the British government's ability to borrow, and thus its ability to wage war. North and Weingast argued that it also permitted private parties to borrow more cheaply and widely. We test these inferences with evidence from a London bank. We confirm that private bank credit was cheap in the early eighteenth century, but we argue that it was not available widely. Importantly, the government reduced the usury rate in 1714, sharply reducing the circle of private clients that could be served profitably. [source]

Does Trade Credit Substitute Bank Credit?

Monetary Policy, Credit and Aggregate Supply: The Evidence from Italy

ECONOMIC NOTES, Issue 3 2002
Riccardo Fiorentini
This paper concerns theory and evidence of the monetary transmission mechanisms. Current research has deeply investigated factors, such as dependence of firms on bank credit, that amplify the impact of monetary policy impulses on aggregate demand exerting strong but temporary effects on output and employment. We present an intertemporal macroeconomic equilibrium model of a competitive economy where current production is financed by bank credit, and then we use it to identify supply,side effects of the credit transmission mechanism in data drawn from the Italian economy. We find evidence that the ,credit variables' identified by the model , the overnight rate as a proxy of monetary policy and a measure of credit risk , have permanent effects on employment and output by altering credit supply conditions to firms. To save on space, mathematical proofs, statistical tests and data sources have been gathered in two separate appendices that can be examined on request. (J.E.L.: E2, E5). [source]

Market Sentiment and Macroeconomic Fluctuations under Pegged Exchange Rates

ECONOMICA, Issue 292 2006
PIERRE-RICHARD AGÉNOR
The effects of an adverse change in market sentiment, defined as a temporary increase in the premium faced by domestic borrowers on world financial markets, are studied in an intertemporal optimizing framework with imperfect capital mobility. Firms' demands for working capital are financed by bank credit. The shock leads to a rise in domestic interest rates, capital outflows and a drop in official reserves, a reduction in bank deposits and loans, a contraction in output, and an increase in unemployment. These predictions are consistent with Argentina's economic downturn in the immediate aftermath of the Mexican peso crisis of December 1994. [source]

Corporate Bankruptcy in Korea: Only the Strong Survive?

FINANCIAL REVIEW, Issue 4 2000
Paola Bongini
G30/G32/G33 Abstract We analyze whether the build-up of financial vulnerabilities led listed Korean companies to bankruptcy. We find that pre-crisis leverage is systematically high for both poor performing/slow growing firms and for profitable/fast-growing firms. Pre-crisis leverage raises the probability of bankruptcy, which is lower for firms: (1) relying more on (renegotiable) bank credit; (2) with less inter-firm debt; and (3) having higher interest coverage ratios. Finally, none of these liquidity variables help predict bankruptcies for chaebol-firms, suggesting that liquidity constraints are more stringent for non-chaebol. Thus, in a systemic crisis it is not only the strong/healthy that survive. [source]

The Determinants of Bank Credit in Industrialized Countries: Do Property Prices Matter?

The Effect of Bank Credit on Asset Prices: Evidence from the Japanese Real Estate Boom during the 1980s

Credit Availability and the Structure of the Homebuilding Industry

REAL ESTATE ECONOMICS, Issue 4 2008
Brent W. Ambrose
We investigate the role of disruptions to the structure of the homebuilding industry due to fluctuations in the availability of bank credit. We find a sustained decline in the large private homebuilder market share series over the period from 1988 to 1993 when many banks with deteriorated health reduced their lending in order to raise capital ratios. Regression analysis at the metropolitan statistical area level supports the hypothesis that, in areas where banks were less well capitalized and had more problem construction loans, the market shares of large private homebuilders that relied primarily on bank credit to finance their production suffered at the expense of the public homebuilders that had better access to external funds, in large part due to their direct access to public capital markets. [source]

PARTIAL DOLLARIZATION, EXCHANGE RATES, AND FIRM INVESTMENT IN PARAGUAY

THE DEVELOPING ECONOMIES, Issue 1 2009
John SERIEUX
E44; F41; G18; O16 Between 1989 and 1993 the government of Paraguay removed most restriction on financial transactions in domestic and foreign currency. The resulting financial deepening also involved partial dollarization. This investigation sought to determine whether partial dollarization led to negative balance sheet effects (in the form of reduced access to investment credit due to depreciation-induced reduction in firms' net worth as a result of currency mismatches on their balance sheets) and, therefore, to investment contractions, at the firm level, in the face of real currency depreciations. Support was found for that thesis. However, there was also evidence that banks expanded credit more rapidly in the face of currency depreciations. These apparent contradictory movements in credit and investment were shown to be a result of the absence of any clear causal link (in a Granger sense) between bank credit to the private sector and private investment in Paraguay. [source]

LAND PRICE, COLLATERAL AND ECONOMIC GROWTH,

THE JAPANESE ECONOMIC REVIEW, Issue 4 2009
MASAYA SAKURAGAWA
This paper extends Kiyotaki and Moore's (1997) to an endogenous growth model and investigates the dynamic properties of a growing economy with binding credit constraint when land is used not only as an input of production but also as collateral. There exists a balanced growth path in an economy with binding credit constraint. In response to a once and for all productivity shock, the developed model shows the propagation mechanism among output, capital, bank credit and the land price in terms of the growth rate. The model's tractability allows us to derive interesting qualitative and quantitative findings on business cycles. [source]