Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/157251
Authors: 
Aldasoro, Iñaki
Unger, Robert
Year of Publication: 
2017
Series/Report no.: 
Discussion Paper, Deutsche Bundesbank 04/2017
Abstract: 
Using a Bayesian vector autoregression (BVAR) identified with a mix of sign and zero restrictions, we show that a restrictive bank loan supply shock has a strong and persistent negative impact on real GDP and the GDP deflator. This result comes about even though flows of other sources of financing, such as equity and debt securities, expand strongly and act as a "spare tire" for the reduction in bank loans. We show that this result can be rationalized by a recently revived view of banking, which holds that banks increase the nominal purchasing power of the economy when they create additional deposits in the act of lending. Consequently, our findings indicate that a substitution of bank loans by other sources of financing might have negative macroeconomic repercussions.
Subjects: 
bank loans
Bayesian VAR
credit creation
ECB
euro area
external financing
financing structure
JEL: 
E30
E40
E50
G20
G30
ISBN: 
978-3-95729-345-9
Document Type: 
Working Paper

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