More bank capital means banks lend more, paper finds

Better-capitalised banks lend more, but capital requirements can hold them back

Banque de France

French bank lending to non-financial corporations is positively correlated with the amount of capital held by the banks, but the elasticity of lending to capital depends on the intensity of the supervisory capital constraint, according to a new Banque de France working paper.

In Credit growth and bank capital requirements: binding or not?, Claire Labonne and Gildas Lamé use a database combining confidential bank-level bank lending survey answers with the discretionary capital requirements set by

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