Wholesale funding shocks hit credit supply, paper finds
Banks' vulnerability to shocks varies with degree of exposure to wholesale funding
Shocks to securities markets and interbank lending have significant effects on the supply of credit, a paper published by the European Central Bank (ECB) argues.
In Lenders on the storm of wholesale funding shocks, Leo de Haan, Philip Vermeulen and Jan Willem van den End use monthly loan data from 181 eurozone banks from August 2007 to June 2013.
They analyse banks' adjustments of loan volumes and lending rates in response to funding shocks. Their results show significant effects from shocks in
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