From Subprime Loans to Subprime Growth? Evidence for the Euro Area
IMF Working Papers, March 1, 2009
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- From Subprime Loans to Subprime Growth? Evidence for the Euro Area
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Bibliographic details
- Authors: Martin Cihak, Petya Koeva Brooks
- Published: March 1, 2009
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451872163.001
Key findings on financial–real linkages
- Bank loan supply responds negatively to declines in bank soundness.
- A cutback in bank loan supply has a negative impact on economic activity.
- A positive shock to the corporate bond spread lowers industrial output.
- Risk indicators for the banking, corporate, and public sectors show an improvement beginning in 2002–03, followed by a major deterioration since 2007.
Quantitative implication
- The estimates imply that the currently estimated bank losses would subtract some 2 percentage points from the euro area output (but with considerable uncertainty around the estimates).
Subject areas and keywords emphasized
- Subject: Bank credit, Banking, Corporate bonds, Credit, Demand for money, Financial institutions, Loans, Money
- Keywords: bank, Bank credit, bank loan supply, contingent claims approach, Corporate bonds, Credit, demand and supply, Demand for money, demand shock, euro, Euro area, Europe, financial sector, financing condition, Global, lending, lending standard, linkages, Loans, money demand demand shock, real sector, WP