Liquidity and capital in bank lending: Evidence from European banks

John Thornton; Caterina di Tommaso

doi:10.1016/j.frl.2019.08.021

Liquidity and capital in bank lending: Evidence from European banks

John Thornton, Caterina di Tommaso

Norwich Business School

Research output: Contribution to journal › Article › peer-review

8 Citations (Scopus)

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Abstract

We examine whether the effect of bank capital on credit growth differs depending upon the level of liquidity in a panel of up to 521 banks from 21 European countries. We find that the effect of an increase in bank capital is positively associated with the level of bank liquidity, suggesting that capital exerts a significantly positive effect on European banks’ credit growth after they retain sufficient liquid funds.

Original language	English
Article number	101273
Journal	Finance Research Letters
Volume	34
Early online date	27 Aug 2019
DOIs	https://doi.org/10.1016/j.frl.2019.08.021
Publication status	Published - May 2020

Keywords

Bank capital, liquidity, lending behavior, European banks

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10.1016/j.frl.2019.08.021

FRL_Thornton_diTommaso_2019Accepted author manuscript, 752 KBLicence: CC BY-NC-ND

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AB - We examine whether the effect of bank capital on credit growth differs depending upon the level of liquidity in a panel of up to 521 banks from 21 European countries. We find that the effect of an increase in bank capital is positively associated with the level of bank liquidity, suggesting that capital exerts a significantly positive effect on European banks’ credit growth after they retain sufficient liquid funds.

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JO - Finance Research Letters

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Liquidity and capital in bank lending: Evidence from European banks

Abstract

Keywords

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