Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/168229
Authors: 
Kogler, Michael
Keuschnigg, Christian
Year of Publication: 
2017
Series/Report no.: 
Beiträge zur Jahrestagung des Vereins für Socialpolitik 2017: Alternative Geld- und Finanzarchitekturen - Session: Banking I A15-V2
Abstract: 
Capital reallocation from unprofitable to profitable firms is a key source of productivity gain in an innovative economy. We present a model of credit reallocation and focus on the role of banks: Weakly capitalized banks hesitate to write off non-performing loans to avoid a violation of regulatory requirements. This results in insufficient credit reallocation across sectors and a distorted capital allocation. Reducing the cost of equity and tightening capital requirements can mitigate distortions.
JEL: 
D92
G21
G28
G33
Document Type: 
Conference Paper

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