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In the transition economy of Vietnam, financial market is dominated by banking sector but commercial banks heavily rely on collateral-based lending. While the relationship between collateral and implied credit risk is still in debate, this paper provides additional empirical evidence regarding the heterogeneous effects and transmission channels of collateral characteristics on loan delinquency. Applying instrumental variable probit analysis on a unique dataset of 2295 internal loan accounts in Vietnam, we find the significantly negative impact of collateral quality on the probability of default of consumer loans, supporting the dominance of borrower selection and risk-shifting over lender selection effects. The finding implies that high-quality collateral not only signals more credible borrower but also fosters good behavior in using loan, enabling bank to mitigate adverse selection and moral hazard problems. Keywords Bank loan * Collateral-based lending * Collateral characteristics * Risk-shifting effect * Probability of default * Vietnam JEL Classification G20 * G21 * C18, Introduction Lending in low-income countries is notoriously risky because of the information asymmetry problems which are potentially higher than that of developed countries (Menkhoff et al. 2006). Therefore, collateral has [...]

I exploit exogenous changes in local credit supply from shale discoveries to identify where and when local access to finance is economically important for firms. I find that the real effects of a credit supply shock are linked to local lending market characteristics. Changes in local credit supply have significant real effects in lending markets dominated by small banks, while there is no effect in other markets. These results suggest that small banks, which do not benefit from deep internal capital markets, face economically meaningful frictions in accessing external interbank markets to fund loans. The effect in other markets, which have large multimarket banks, indicates that these markets are not as dependent on local funding sources for lending. These findings illustrate the important role that the internal capital markets of banks have on real outcomes. History: Accepted by Amit Seru, finance. Funding: Financial support for this project was provided by the Ewing Marion Kauffman Foundation [Kauffman Dissertation Fellowship]. Supplemental Material: The online appendix is available at https://doi.org/10.1287/mnsc.2017.2818. Keywords: credit supply * bank lending * bank deposits * shale * exogenous shock, 1. Introduction In frictionless financial markets, entrepreneurs and firms should be able to obtain funding for all positive net present value projects. In such a world, changes in local credit [...]

We study the dynamics of borrower reputation in bank loan markets following revelations of financial misreporting by the borrower. Misreporting firms pay greater loan spreads than matched firms for at least six years following revelation of the misreporting, and there is no evidence of a downward trend in the misreporting premium. Following revelation, misreporting firms are more likely to engage in various actions to potentially rebuild their reputations, but even firms that engage in multiple actions continue to pay greater loan spreads for at least six years. Our results suggest that misreporting causes long-lasting and costly reputation losses that firms find very difficult or prohibitively costly to restore. History: Accepted by Wei Jiang, finance. Supplemental Material: Data and the online appendix are available at https://doi.org/10.1287/mnsc.2017.2739. Keywords: reputation * cost of debt * bank loans * financial restatements * fraud, 1. Introduction The economics literature is rich with theoretical and empirical studies that examine the role of reputation when agents transact (see Wilson 1985). Corporate reputation, a set of attributes [...]

Abstract. Problem definition: Banks commonly use asset-based lending (ABL) to provide loans collateralized by a borrower firm's inventory. We study the implications of ABL by examining how banks should determine [...]

Using an estimated dynamic stochastic general equilibrium model with banking, this paper first provides evidence that monetary policy reacted to bank loan growth in the United States during the Great Moderation. It then shows that the optimized simple interest-rate rule features no response to the growth of bank credit. However, the welfare loss associated to the empirical responsiveness is small. The sources of business cycle fluctuations are crucial in determining whether a 'leaning-against-the-wind' policy is optimal or not. In fact, the predominant role of supply shocks in the model gives rise to a trade-off between inflation and financial stabilization. (JEL E32, E44, E52), I. INTRODUCTION The role of central banks in promoting financial stability, in addition to inflation stability, has been debated well before the Great Recession. The so-called 'Greenspan doctrine,' which objects [...]

Abstract. Two innovative financing schemes have emerged in recent years to enable suppliers to obtain financing for production. The first, purchase order financing (POF), allows financial institutions to offer loans [...]

Abstract. Problem description: We study the impact of credit ratings on operational and financial decisions of a supply chain with a supplier and a retailer interacting via an early payment [...]

This paper analyses the first stage of the Kredit Usaha Rakyat (KUR) programme, the guaranteed microcredit programme for supporting the development of SMEs in Indonesia. KUR is a partial credit [...]

ABSTRACT The intermediation role of banks which is vital for the development of any nation can be adversely affected by non-performing loans. This study investigated the macroeconomic determinants of non-performing [...]

We estimate the impact of the COVID-19 crisis on business failures among small and medium-size enterprises (SMEs) in seventeen countries using a large representative firm-level database. We use a simple model of firm cost minimization and measure each firm's liquidity shortfall during and after COVID-19. Our framework allows for a rich combination of sectoral and aggregate supply, productivity, and demand shocks. We estimate a large increase in the failure rate of SMEs under COVID-19 of nearly 9 percentage points, absent government support. Accommodation and food services; arts, entertainment, and recreation; education; and other services are among the sectors most affected. The SME jobs at risk due to business failures related to COVID-19 represent 3.1 percent of private sector employment. Despite the large impact on business failures and employment, we estimate only moderate effects on the financial sector: the share of nonperforming loans on bank balance sheets would increase by up to 11 percentage points, representing 0.3 percent of banks' assets, and would result in a 0.75 percentage point decline in the common equity tier 1 capital ratio. We also evaluate the cost and effectiveness of various policy interventions. The fiscal cost of an intervention that narrowly targets at-risk firms can be modest (0.54 percent of gross domestic product). However, at a similar level of effectiveness, nontargeted subsidies can be substantially more expensive (1.82 percent of gross domestic product). Our results have important implications for the severity of the COVID-19 recession, the design of policies, and the speed of the recovery. JEL classification: D2, E65, G33 Key words: COVID-19, business failures, liquidity, small business, Working Paper 2020-21 December 2020 1 Introduction The COVID-19 economic shock is unprecedented both in its complexity and severity. Nationwide lockdowns, in conjunction with behavioral changes due to the fear [...]

Since 1934, the Swiss Wirtschaftsring/Cercle Economique (Economic Circle), now the WIR-Bank, has issued its own currency, not backed by Swiss Francs. Turnover in WIR is countercyclical: firms use it more in a recession. A money-in-the-production-function model implies that this spending arises through larger WIR Balances for larger firms, but greater WIR Velocity for smaller ones. Panel data by industrial sector confirm this pattern, similar to commercial trade credits, a major source of non-bank credit. The countercyclical multiplier on WIR expenditures is highly leveraged, and its impact on the Swiss Economy greater than its turnover would suggest. Comparative Economic Studies (2016) 58, 570-605. doi:10.1057/s41294-0160001-5; published online 14 July 2016 Keywords: complementary currency, community currency, countercyclical JEL Classification: E51, G21, P13, INTRODUCTION The Swiss Wirtschaftsring or 'Economic Circle,' founded in 1934, is nowadays called the WIR-bank. Those studying reciprocal payment mechanisms refer to it as a 'social,' 'community,' or 'complementary' currency--terms [...]

We study how a bank's willingness to lend to a previously exclusive firm changes once the firm obtains a loan from another bank ('outside loan') and breaks an exclusive relationship. Using a difference-indifference analysis and a setting where outside loans are observable, we document that an outside loan triggers a decrease in the initial bank's willingness to lend to the firm, i.e., outside loans are strategic substitutes. Consistent with concerns about coordination problems and higher indebtedness, we find that this reaction is more pronounced the larger the outside loan and it is muted if the initial bank's existing and future loans retain seniority and are protected with valuable collateral. Our results give a benevolent role to transparency enabling banks to mitigate adverse effects from outside loans. The resulting substitute behavior may also act as a stabilizing force in credit markets limiting positive comovements between lenders, decreasing the possibility of credit freezes and financial crises. Keywords: coordination failures; credit freezes; credit rationing; credit supply; debt seniority; floating charge; negative externalities; nonexclusivity; transparency History: Received June 27, 2013; accepted April 26, 2015, by Itay Goldstein, finance. Published online in Articles in Advance January 6, 2016., 1. Introduction In most countries, firms gradually move from exclusive bank-lending relationships to borrowing from multiple banks. Engaging multiple banks may allow firms to reduce hold-up problems (e.g., Sharpe 1990, [...]

This paper rigorously investigates the relationship between foreign bank entry and bank competition in Africa. It uses newly databases of bank competition measured by the Boone indicator and foreign bank entry. Our final sample covers 34 African countries over the period 1997-2009. To take into account potential endogeneity between our measures of bank competition and foreign bank entry we employ the GMM system dynamic-panel data estimation. The GMM results show that there is an inverted U-shaped relationship between foreign bank entry and bank competition. Our result remains robust to the introduction of financial depth measured by: private credit, liquid liabilities, bank assets and deposit money; bank efficiency: overhead costs, bank cost to income ratio, and the net interest margin; and bank stability measured by: bank capital, the Z-score and deposit insurance; bank concentration, defined as the share of assets of the three largest banks, the logarithm of perworker GDP, the inflation rate, corruption, geography and religion as controls. Our findings have important implications for both policymakers and regulators who work on issues related to African economies. Since the majority of foreign banks in Africa are originated from developed countries, our result suggests to governments to encourage and diversify foreign bank presence in the continent. Specifically, they should encourage foreign banks entry from developing and emerging economies. This will increase competition in the banking sector for those countries and will boost economic growth by lowering the cost of credit. JEL Classifications: G21, G15, F36 Keywords: Foreign bank entry, bank competition, Africa., INTRODUCTION The presence of foreign banks in Africa has greatly increased over the past two decades. According to Claessens and van Horen (2014), the share of foreign banks increased from [...]

We investigate determinants of financial distress in large financial institutions based on the Distance-to-Default and Z-Scores measures. Using data of U.S. bank holding companies (BHCs), we find that the housing price index is a consistently significant factor across all BHCs and the non-performing loan ratio is the most powerful indicator for financial distress. Short-term wholesale funding is also a reliable default risk indicator. We additionally find that all the three regulatory capital requirements are very important for controlling default risk, particularly in the post-crisis period. (JEL C53, G14, G21, G28), I. INTRODUCTION In recent years many large U.S. financial institutions have failed or came close to failing due to their lending practices and trading behavior (Allen, Babus, and Carletti 2009; [...]

We analyze the multiple channels of influence that global financial crisis-induced credit restrictions had on New Zealand's subnational housing markets. The dynamics caused by the credit shock are compared to those caused by a migration shock, a more common form of housing shock in New Zealand. We focus on the impacts on two outcome variables, house prices and housing supply, within a structural time series model of regional housing markets. Both shocks cause substantial and prolonged cyclical adjustments in each variable. Similar cyclical dynamics could complicate the conduct of macroprudential policies designed to affect bank credit allocation. (JEL E32, E44, R21), I. INTRODUCTION Housing markets around the world were affected significantly by the global financial crisis (GFC). Real house prices in New Zealand fell by 15.3% between 2007Q2 and 2011Q2. In [...]

It is widely acknowledged that the 2007 mortgage crisis was preceded by a broad deterioration in underwriting diligence. This paper shows that this deterioration varied by the industry affiliation of mortgage lenders. Loans issued by homebuilders and stand-alone lenders were significantly less likely to default than loans issued by depository banks and affiliates of major financial institutions. I argue that homebuilders and stand-alone lenders had the least financial capacity to hold mortgages, and their resulting need to sell loans quickly on the secondary market forced them to issue safer loans. Tests of other explanations, including differences in information and incentives to avoid foreclosure externalities, receive little support. This study highlights a novel means by which firm boundaries influence firm adaptation to changing market conditions by defining the boundaries of the internal capital markets and hence the relative constraints of constituent units. Keywords: corporate finance; financial institutions; banks; organization studies; strategy; real estate History: Received January 10, 2012; accepted February 19, 2014, by Bruno Cassiman, business strategy. Published online in Articles in Advance August 11, 2014., 1. Introduction One of the precursors to the housing crisis that began in 2007 was a sharp decrease in mortgage underwriting quality earlier in the 2000s (Demyanyk and Van Hemert [...]

Welfare losses due to misallocation of resources in the deposit and loans markets and inefficiency costs in both markets resulting from the concentration of the Ghanaian banking industry are estimated, respectively using the Harberger's triangle and deviations from cost efficient stochastic frontier approaches. Corporate governance variables hypothesized in the literature to be correlated with bank inefficiencies were also investigated. Estimates suggest that net welfare loss over 2001-2008 averaged 2.6% of gross domestic product (GDP) per year, while inefficiency costs averaged only 0.7% of GDP. Bank concentration is positively correlated with efficiency in both deposits and loans markets. The elasticity of operating costs with respect to deposits exceeds the elasticity with respect to loans. We recommend that steps be taken to reduce bank concentration as the resultant narrowing of interest rate spreads will likely yield welfare gains that exceed efficiency gains realizable from increased concentration. JEL Classifications: E44, G21, O16, INTRODUCTION This paper estimates the costs imposed on the Ghanaian economy by the fact that the banking industry is concentrated. Two categories of costs are investigated--i) loss of social welfare [...]

We investigate the determinants of rosea participation in Bolivia by using a sample of 5,746 households. Evidence shows that in Bolivia rosea is a consumption driven phenomenon. The probability of participating in roscas increases parallel to households' income. Middle-income families with more members and higher expenses are more likely to join roscas. We also find that people who are likely to be excluded from formal credit instruments, such as younger individuals, females, less educated, and indigenous people, are more inclined to participate in roscas. JEL Classifications: D14, G21 Keywords: Financial Exclusion, Informal Financial Institutions, Rosca, Bolivia, INTRODUCTION Microfinance is imperative to alleviate poverty in the emerging world. In many developing countries governments and other non-governmental organisations set up financial schemes to provide funds for poor and [...]

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.ejor.2010.01.017 Byline: Diana Barro, Antonella Basso Keywords: Finance; Credit risk; Bank loan portfolios; Contagion models; Entropy spatial models Abstract: This contribution studies the effects of credit contagion on the credit risk of a portfolio of bank loans. To this aim we introduce a model that takes into account the counterparty risk in a network of interdependent firms that describes the presence of business relations among different firms. The location of the firms is simulated with probabilities computed using an entropy spatial interaction model. By means of a wide simulation analysis we investigate the behavior of the model proposed and study the effects of default contagion on the loss distribution of a portfolio of bank loans. Author Affiliation: Dept. of Applied Mathematics and SSAV, University of Venice, 30123 Venice, Italy Article History: Received 9 May 2008; Accepted 11 January 2010

To authenticate to the full-text of this article, please visit this link: http://dx.doi.org/10.1111/j.1467-6486.2009.00901.x Byline: Oystein D. Fjeldstad (1), Amir Sasson (1) Abstract: abstract Learning about customers and their contexts is vital to firm strategy. We examine how firms can learn by participating in their customers' networks. Specifically, we explain how a bank can increase the value that it creates for customers by being embedded in the networks in which the customers are embedded. We argue that knowledge pertinent to a particular customer is available in the network of affiliated, inter-related customers, and that being structurally embedded in this network can help banks overcome information asymmetries. We use hierarchical linear modelling to test the argument that a bank's structural embeddedness in its customers' network positively affects the bank's ability to offer favourable credit terms. We find that not only does such structural embeddedness affect credit terms, but it also moderates the effects of previously examined relational embeddedness on credit terms. Author Affiliation: (1)BI-Norwegian School of Management Article note: Amir Sasson, BI-Norwegian School of Management, N-0442, Oslo, Norway (amir.sasson@bi.no).

We use response data collected by a lender to estimate the probabilities of loan offers being accepted by the applicants and the survival probabilities of default and of paying back early. Combining all those together we estimated the expected profit surface for the lender at the time of application before making an offer to an applicant. The results show how a lender could find the optimal interest rate to increase the expected profit or its market share. We also consider how different optimal decision policies could be applied to different market segments. Journal of the Operational Research Society (2010) 61, 430-442. doi: 10.1057/jors.2009.33 Published online 1 April 2009 Keywords: profitability; acceptance; credit; take-up

To authenticate to the full-text of this article, please visit this link: http://dx.doi.org/10.1111/j.1540-6261.2009.01495.x Byline: DARRELL DUFFIE, ANDREAS ECKNER, GUILLAUME HOREL, LEANDRO SAITA (*) Abstract: ABSTRACT The probability of extreme default losses on portfolios of U.S. corporate debt is much greater than would be estimated under the standard assumption that default correlation arises only from exposure to observable risk factors. At the high confidence levels at which bank loan portfolio and collateralized debt obligation (CDO) default losses are typically measured for economic capital and rating purposes, conventionally based loss estimates are downward biased by a full order of magnitude on test portfolios. Our estimates are based on U.S. public nonfinancial firms between 1979 and 2004. We find strong evidence for the presence of common latent factors, even when controlling for observable factors that provide the most accurate available model of firm-by-firm default probabilities. Article note: (*) Duffie is at the Graduate School of Business, Stanford University. Eckner and Horel are at Bank of America. Saita is at Barclays Capital. We are grateful for financial support from Moody's Corporation and Morgan Stanley; for data from Moody's and Ed Altman; for research assistance from Sabri Oncu and Vineet Bhagwat; for remarks from Torben Andersen, Andre Lucas, Richard Cantor, Stav Gaon, Tyler Shumway, Jun S. Liu, Xiao-Li Meng, and especially Michael Johannes; and for suggestions by a referee, an associate editor, and the editor, Campbell Harvey.

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jdeveco.2008.07.004 Byline: Thorsten Beck (a), Heiko Hesse (b) Keywords: Foreign bank entry; Financial sector reform; Bank efficiency; Financial intermediation; Uganda Abstract: Using international comparisons and a unique bank-level dataset on the Ugandan banking system over the period 1999 to 2005, we explore the factors behind consistently high interest rate spreads and margins. International comparisons show that the small size of Ugandan banks, persistently high T-Bill rates and institutional deficiencies explain large proportions of the high Ugandan interest rate margins. The Ugandan bank panel confirms the importance of macroeconomic factors, such as high inflation, high T-Bill rates and exchange rate appreciation. There is also evidence for the small market place and high costs of doing business explaining persistently high spreads and margins; smaller banks and banks targeting the low end of the market incur higher costs and therefore higher margins. Spreads and margins also vary significantly with the sectoral loan portfolio composition of banks, while there is little evidence for foreign bank entry, privatization or changes in market structure explaining variation in spreads or margins over time. Author Affiliation: (a) Center, Department of Economics, Tilburg University, Netherlands (b) IMF, United States Article History: Received 29 June 2007; Revised 7 April 2008; Accepted 15 July 2008 Article Note: (footnote) [star] We would like to thank Alexander Al-Haschimi, Steve Bond, Martin Cihak, Robert Cull, Michael Fuchs, Patrick Honohan, Dino Merotto, John Muellbauer, Richard Podpiera, Rachel Sebudde, two anonymous referees, and seminar participants at Oxford for useful comments and suggestions and are grateful to the Bank of Uganda for sharing the data with us and to Edward Al-Hussainy and Carlos Espina for help with the data. This paper's findings, interpretations, and conclusions are entirely those of the authors and do not necessarily represent the views of the World Bank, the IMF, its Executive Directors, or the countries they represent.

We provide empirical evidence, based on tick-by-tick data for the e-MID euro area interbank market covering 2003 and 2004, that the overnight interest rate shows a clear downward pattern throughout the operating day. Thus, a positive hourly interest rate (half basis point) implicitly emerges from the intraday term structure of the overnight rate. Such a pattern was not detected in the mid-1990s: we explain this evolution as an outcome of the recent trend toward real-time settlement. The estimated intraday interest rate is lower than in the United States: this is due to the different cost of central bank daylight credit. JEL codes: E43, E50, G21 Keywords: intraday interest rate, overnight interbank market, real-time settlement, central bank daylight overdrafts., IS THERE A MARKET price for 'intraday money'? The answer to this question is interesting for banks, as it gives some insights into their liquidity management. It is also informative [...]

This paper analyzes bank lending activities for owner-occupied housing loan extensions to minority members of Mississippi's population. We analyze data on housing loan applications and accessibility patterns among the minority Black population relative to the majority White population groups in the State. The study looks hard at data for evidence of any patterns of discrimination toward minority housing loan applicants. And a Probit model is applied to examine the relative importance of economic variables (such as employment status, income level, and credit rating) versus non-economic parameters (such as geographical location) in the housing loan decision making of banks toward minority borrowers. The evidence from our comparative data analysis suggests that there is a consistently high denial rates for minorities, which is not explained by financial (economic) factors. The formal test of discrimination with the Probit analysis also indicates some evidence of discrimination from, at least, the standpoint of redlining practices, albeit only with a modest predictive power. Keywords: housing loans, institutional discrimination, loan denial rates, economic significance JEL Classification Codes: G1, O1, R0, The issues of inequality and discrimination in bank lending have been studied widely and established as products of the broader institutional mechanism that underlie the greater society that is the [...]

This paper investigates the level and the determinants of retail banking interest rate differences among Spanish banks in the period 1989-2003. We find that the interest rates of twenty five different bank loan and deposit products adjust rather rapidly to theft long-term values in response to external shocks, as the relative version of the Law of One Price predicts, but the evidence runs contrary to the absolute version of the Law. Credit risk premium, part of the marginal cost of the loans granted by a particular bank, is an important source of interest rate dispersion across banks and loan products, both before and after Spain joined the Euro zone. Therefore, differences in credit risk policies across banks must be taken into account when forming expectations about European retail banking integration. JEL code: G21 Keywords: Law of One Price, interest rate dispersion, markup convergence., THIS PAPER USES THE SPANISH retail banking market as a case study to investigate the workings of the Law of One Price (hereafter, LOP). Although economic integration and price convergence [...]

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.ejor.2006.03.037 Byline: Suresh Kumar Goyal (a), Jinn-Tsair Teng (b), Chun-Tao Chang (c) Keywords: Finance; Inventory; EOQ; Progressive interest charge Abstract: In fact, most credit card issuers (or home equity banks) frequently offer cardholders (or customers) a teaser interest rate (say, I.sub.1), which is significantly lower than the regular interest rate of I.sub.2 (with I.sub.2 I.sub.1) for only 6months or a year (say, M.sub.2) to lure new customers from their competitors. Consequently, the customer faces a progressive interest charge from the bank. If the customer pays the outstanding balance by the grace period (say, M.sub.1 which is generally 25days), then the bank does not charge any interest. If the outstanding amount is paid after M.sub.1, but by M.sub.2 (with M.sub.2 M.sub.1), then the bank charges the customer the teaser interest rate of I.sub.1 on the unpaid balance. If the customer pays the outstanding amount after M.sub.2, then the bank charges the regular interest rate of I.sub.2. In this paper, we first establish an appropriate EOQ model for a retailer when the bank (or the supplier) offers a progressive interest charge, and then provide an easy-to-use closed-form solution to the problem. Author Affiliation: (a) Department of DS & MIS, Concordia University, Montreal, Quebec, Canada H3G1M8 (b) Department of Marketing and Management Sciences, William Paterson University of New Jersey, Wayne, NJ 07470-2103, USA (c) Department of Statistics, Tamkang University, Tamsui, Taipei, Taiwan 25137, Taiwan, ROC Article History: Received 28 June 2004; Accepted 8 March 2006

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jimonfin.2006.09.009 Byline: Thomas Weithoner Abstract: Costly crisis prevention has positive external effects, which leads to free-riding of governments on each other's efforts. 'Ordinary' IMF loans aggravate existing externalities, reinforcing the under-investment problem. We consider the reform proposals of the 'Meltzer commission' in both loan and insurance models and show how the IMF can eliminate country moral. The efficiency-ensuring loan policy accounts for given externalities and involves effort-contingent discounts on interests or the extension of credit volume. Similar results hold for the insurance framework. Ex ante participation requires that smaller countries be 'subsidized' by large ones, or that IMF policy consider distributional aspects in addition to efficiency. Author Affiliation: University of Tuebingen, Department of Economics, Nogatstrasse 32, 12051 Berlin, Germany

The adjustments of bank lending rates due to declining market rates are examined empirically.

VAR analysis on a measure of bank lending standards collected by the Federal Reserve reveals that shocks to lending standards are significantly correlated with innovations in commercial loans at banks and in real output. Credit standards strongly dominate loan rates in explaining variation in business loans and output. Standards remain significant when we include various proxies for loan demand, suggesting that part of the standards fluctuations can be identified with changes in loan supply. Standards are also significant in structural equations of some categories of inventory investment, a GDP component closely associated with bank lending. The estimated impact of a moderate tightening of standards on inventory investment is of the same order of magnitude as the decline in inventory investment over the typical recession. JEL codes: E32, E5, G21 Keywords: credit crunch, credit rationing, credit standards, Loan Officer Survey., FOR MOST OF the last 35 years, economists at the Federal Reserve have asked a sample of loan officers at large U.S. banks some version of the following question: Over [...]

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jimonfin.2006.04.002 Byline: Neven T. Valev Abstract: This paper shows that non-economic uncertainty in foreign countries contributes to a bias toward short-term maturity in international lending. Frequent government changes and weak institutions explain why some countries find it difficult to obtain long-term financing. Debt maturity is also explained by the level of economic and financial development of a country, the composition of loan portfolios in terms of the type of borrowers, and debt restructuring programs, among other variables. The results are obtained using data on international lending by three groups of U.S. banks: large, medium-sized, and small. Small banks shorten the maturity of their international loans in response to uncertainty to a greater extent compared to large banks. Author Affiliation: Department of Economics, Andrew Young School of Policy Studies, Georgia State University, MSC 4A0619, Atlanta, GA 30303-3084, United States

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jimonfin.2006.04.004 Byline: Asli Demirguc-Kunt (a), Enrica Detragiache (b), Poonam Gupta (b) Abstract: Using aggregate and bank-level data for several countries, the paper studies what happens to the banking system following a banking crisis. Crises are not accompanied by a significant decline in aggregate bank deposits relative to GDP, although depositors leave weaker banks for stronger ones. Credit slows substantially, but the credit-to-GDP ratio is higher after the crisis. Output recovery begins in the second year after the crisis while credit still stagnates. Banks, including healthier ones, reallocate their asset portfolio away from loans, suggesting a lack of loan demand or collateral. Banks also improve their cost efficiency. Author Affiliation: (a) The World Bank, 1818 H Street, NW, Washington, DC 20433, USA (b) International Monetary Fund, 700 19th Street, NW, Washington, DC 20431, USA

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jfineco.2005.06.003 Byline: Gabriel Jimenez (a), Vicente Salas (a)(b), Jesus Saurina (a) Keywords: Collateral; Asymmetric information; Relationship banking; Competition; Business cycle Abstract: We estimate a comprehensive model of the determinants of collateral in loans extended to business firms. We use a panel data on a sample of bank loans to Spanish firms from 1984 to 2002. Consistent with theories that view collateral as a solution to adverse selection problems, our results provide direct evidence of a negative association between collateral and a borrower's risk. We also present evidence on previously unexplored determinants of collateral such as credit market competition, lender type, and the business cycle. Author Affiliation: (a) Banco de EspaA[+ or -]a, C/Alcala 48, 28014 Madrid, Spain (b) Universidad de Zaragoza, Spain Article History: Received 12 December 2003; Revised 24 February 2005; Accepted 17 June 2005 Article Note: (footnote) [star] This paper is the sole responsibility of its authors and the views presented here do not necessarily reflect those of the Banco de EspaA[+ or -]a. We appreciate the detailed comments made by the referee, which helped us improve the paper significantly. Moreover, we thank everyone at a Centro de Estudios Monetarios y Financieros (CEMFI) seminar for their numerous comments and suggestions, in particular, M. Arellano, S. Bentolila, O. Bover, and R. Repullo. Comments from participants at the Second International Conference on Credit Risk held at Montreal and in the European Finance Association meetings held in Maastrich, in particular, those from E. Altman, J. Dermine, M. Levonian, and K. Roszbach were likewise gratefully received. We also thank A. Almazan and J. Segura for their very detailed comments on previous drafts, as well as our colleagues at the Financial Stability Department at Banco de EspaA[+ or -]a for their helpful suggestions. Any errors that remain are, however, entirely the authors' own.

James (1987) and Lummer and McConnell (1989) find that during the 1970s and 1980s the market responded positively to announcements of bank lending agreements. However, many of the advantages associated with bank lending relationships have largely disappeared since the 1980s due to financial system changes and greater availability of and less costly financial information. We find that bank loan announcements produced positive abnormal returns in the 1980s, but by the latter part of our sample period those announcement returns disappear entirely. We do find that bank loan relationships may still be valuable to smaller, poorer performing firms or during periods of high credit risk spreads. JEL codes: G14, G21 Keywords: relationship banking, loan announcements returns., EXTENSIVE PRIOR RESEARCH documents that announcements of bank loan agreements produce positive abnormal returns for borrowing firms. The specialization, monitoring, screening, and certification functions associated with lending relationships have been [...]

Arbitrage apparent in overnight inter bank loan markets is studied. Brokered federal funds, non brokered federal funds and Eurodollars of the market are included for analysis.

A study of monetary policy in Poland from 1994 is presented. The effects of bank lending channels, interest rates and exchange rates on the monetary policies are examined.