Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/217263
Authors: 
Kick, Thomas
Malinkovich, Swetlana
Merkl, Christian
Year of Publication: 
2020
Series/Report no.: 
Bundesbank Discussion Paper No. 27/2020
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.
Subjects: 
DSGE
Bank Capital
Loan Supply
Financial Frictions
JEL: 
E24
E32
E44
ISBN: 
978-3-95729-713-6
Document Type: 
Working Paper

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