DNB paper examines global data on ‘prop trading’
Proprietary trading in securities is linked to decreased loan supply, researchers say
A working paper published by the Netherlands Bank examines whether commercial banks use the support they get from central banks to increase securities trading on their own account.
In Credit Supply: Are there negative spillovers from banks’ proprietary trading? Michael Kurza and Stefanie Kleimeierb use a global sample of 132 major banks from 2003 to 2016. They find that the banks’ “proprietary trading” in securities “is indeed associated with decreased loan supply”.
The authors note that after
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