The regulation of bank capital as a means of smoothing the credit cycle is a central element of forthcoming macro …-prudential regimes internationally. For such regulation to be effective in controlling the aggregate supply of credit it must be the case … credit are unable to offset changes in credit supply by affected banks. This paper examines micro evidence--lacking to date …

We test three hypotheses regarding changes in supervisory toughness' and their effects on bank lending. The data … provide modest support for all three hypotheses that there was an increase in toughness during the credit crunch period (1989 …, affected bank lending. However, all of the measured effects are small, with 1% or less of loans receiving harsher or easier …

Standard economic theory says that unsecured, high-interest, short-term debt — such as borrowing via credit cards and … bank overdraft facilities — helps individuals smooth consumption in the event of transitory income shocks. This paper shows … income shock of unemployment. Instead, individuals smooth their credit card debt and overdrafts by adjusting consumption. We …

a bank/brokerage-credit-fueled stock-market bubble. The direct effect is a 25 cent increase in a stock's market …Research on leverage and asset-price fluctuations focuses on the direct effect of lax bank lending enabling financially …-constrained investors to take excessive risks. Ignored are unconstrained investors speculating on higher prices during credit booms. To …

A growing literature shows that credit indicators forecast aggregate real outcomes. While researchers have proposed … simple, frictionless, model explains empirical findings commonly attributed to credit cycles. Our key assumption is that … firms have heterogeneous exposures to underlying economy-wide shocks. This leads to endogenous dispersion in credit quality …

How does the large market for credit score improvement products affect consumers and market efficiency? For consumers …, we use a randomized encouragement design on a standard credit builder loan (CBL) and find null average effects on scores … credit activity. CBLs induce delinquency on pre-existing loan obligations, suggesting that even a seemingly modest additional …

This paper develops a network model of interbank lending, in which banks decide to extend credit to their potential … literature on financial networks, we focus on how anticipation of future defaults may result in ex ante “credit freezes,” whereby … banks refuse to extend credit to one another. We first characterize the terms of the interbank contracts and the patterns of …

In this paper, I show that Japan will not be able to have a viable banking sector without stopping deflation. The … banking industry has not shown a profit since fiscal 1993 (ended March 1994) if one excludes capital gains from stock and real …

aggregate loan movements in Japan for the period 1990 to 2010 into bank, firm, industry, and common shocks. The high degree of … separate firm-borrowing shocks from bank-supply shocks using a vast sample of matched bank-firm lending data. We decompose … role for granular shocks as in Gabaix (2011). We show that idiosyncratic granular bank-supply shocks explain 30-40 percent …

This paper is the first to study the effect of financial restatement on bank loan contracting. Compared with loans …