|
EconStor >
Federal Reserve Bank of New York >
Staff Reports, Federal Reserve Bank of New York >
Please use this identifier to cite or link to this item:
http://hdl.handle.net/10419/60818
|
| | |
| Title: | | A note on bank lending in times of large bank reserves  |
| Authors: | | Martin, Antoine McAndrews, James Skeie, David |
| Issue Date: | | 2011 |
| Series/Report no.: | | Staff Report, Federal Reserve Bank of New York 497 |
| Abstract: | | The amount of reserves held by the US banking system reached $1.5 trillion in April 2011. Some economists argue that such a large quantity of bank reserves could lead to overly expansive bank lending as the economy recovers, regardless of the Federal Reserve's interest rate policy. In contrast, we show that the size of bank reserves has no effect on bank lending in a frictionless model of the current banking system, in which interest is paid on reserves and there are no binding reserve requirements. We also examine the potential for balance-sheet cost frictions to distort banks' lending decisions. We find that large reserve balances do not lead to excessive bank credit and may instead be contractionary. |
| Subjects: | | Banking lending reserves interest on reserves Federal Reserve |
| JEL: | | G21 E42 E43 E51 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Staff Reports, Federal Reserve Bank of New York
|
| |
| | |
Download bibliographical data as:
BibTeX
|
| |
Share on:http://hdl.handle.net/10419/60818
|
Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.
|