Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/119886
Authors: 
Kick, Thomas
Pausch, Thilo
Ruprecht, Benedikt
Year of Publication: 
2015
Series/Report no.: 
Discussion Paper, Deutsche Bundesbank 32/2015
Abstract: 
Excessive credit creation by banks was at the root of the recent financial crisis. Nevertheless, micro-prudential regulation lacks a clear methodology to identify these banks. Combining arguments from banking and auction theory, we show that overoptimism causes excessive lending, subsequently yielding abnormal loan write-offs. We propose a new measure of excessive credit growth known from macroeconomics to identify credit booms and test our model for German bank and bankportfolio level data. Unlike traditional measures of (excessive) loan growth, our new measure identifies banks that are affected by abnormal loan write-offs, need capital support, or default in subsequent years.
Subjects: 
Excessive credit growth
Winner's curse
Loan-to-GDP gap
Micro-prudential regulation
Identifying weak banks
JEL: 
C23
G21
G32
ISBN: 
978-3-95729-190-5
Document Type: 
Working Paper

Files in This Item:
File
Size
659.78 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.