Loan supply and bank capital: A micro-macro linkage
Kick T, Malinkovich S, Merkl C (2020)
Publication Type: Journal article
Publication year: 2020
Journal
Article Number: 102166
DOI: 10.1016/j.jimonfin.2020.102166
Abstract
In the presence of financial frictions, banks’ capital position may constrain their ability to provide loans. The banking sector may thus have important feedback effects on the macroeconomy. To shed new light on this issue, we combine two approaches. First, we use microeconomic balance sheet data from Germany and estimate banks’ loan supply response to capital changes. Second, we modify the model of Gertler and Karadi (2011) such that it can be calibrated to the estimated partial equilibrium elasticity of bank loan supply with respect to bank capital. Although the targeted elasticity is remarkably different from the one in the baseline model, banks continue to be an important originator and amplifier of macroeconomic shocks. Thus, combining microeconometric results with macroeconomic modeling provides evidence on the effects of the banking sector on the macroeconomy.
Authors with CRIS profile
Swetlana Malinkovich
Lehrstuhl für Volkswirtschaftslehre, insbesondere Makroökonomik
Christian Merkl
Lehrstuhl für Volkswirtschaftslehre, insbesondere Makroökonomik
Involved external institutions
Germany (DE)How to cite
APA:
Kick, T., Malinkovich, S., & Merkl, C. (2020). Loan supply and bank capital: A micro-macro linkage. Journal of International Money and Finance. https://dx.doi.org/10.1016/j.jimonfin.2020.102166
MLA:
Kick, Thomas, Swetlana Malinkovich, and Christian Merkl. "Loan supply and bank capital: A micro-macro linkage." Journal of International Money and Finance (2020).
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