German banks’ capital levels affect loan supply – Bundesbank paper
Authors find balance sheet data shows loan supply has positive elasticity to capital levels
Changes in German banks’ capital ratios have a significant effect on their supply of credit, a working paper published by the Deutsche Bundesbank finds.
In Loan supply and bank capital: A micro-macro linkage, Thomas Kick, Swetlana Malinkovich and Christian Merkl use a database on the balance sheets of all Germany’s banks, covering 1,770 banks in 2013.
Most German banks, the authors note, have business models that focus on lending rather than generating income via fees. The majority of German
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