Banks expand some lending following crises, research shows
While portfolio lending is restricted, banks expand some other forms of lending
Banks do not always restrict lending after a “damaging” financial shock, research from the Federal Reserve Bank of San Francisco reveals.
“While we find that banks restrict portfolio lending, they also expand some other types of lending and simultaneously increase their holdings of less risky and more liquid securities,” authors Rhys Bidder, John Krainer and Adam Shapiro say.
Their results challenge the view that banks always cut lending following a financial shock. They also question the
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