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Credit supply and macroeconomic fluctuations

Pool, S., 2018, [Groningen]: University of Groningen, SOM research school. 240 p.

Research output: ThesisThesis fully internal (DIV)Academic

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  • Sebastiaan Pool
This thesis focusses on credit supply. We look at the consequences of changes in the amount of credit supply for the macro-economy and at factors that affect the amount of credit supply. In Chapter 2 we analyze the impact of credit default risk on bank lending. We show that provisioning for expected losses in the loan portfolio is backward looking and therefore causes pro-cyclical dynamics in the real economy. In Chapter 3 we extend the analysis of Chapter 2 to examine the impact of credit defaults on the banks. We show that if banks are undercapitalized, the effectiveness of monetary policy is impeded and credit supply declines strongly. In Chapters 4 and 5 we examine the role of credit allocation in the buildup of imbalances. In these chapters we show that when credit supply suddenly increases, credit tends to flow typically to sectors that produce goods that are both internationally hardly tradeable and have a low supply elasticity. These characteristics are illustrative for the real estate sector. In Chapter 4 we show how the growth of the market for mortgage loans is subsequently related to the growth of the unregulated banking sector. These unregulated banks create too many uninsured deposits and take more financial risk than is optimal for the economy. Finally, in Chapter 5 we show how the build-up of macro-economic imbalances in the euro area was related to the decrease in real interest rates experienced by peripheral countries in the run-up to the EMU.
Translated title of the contributionKredietverlening en macro-economische fluctuaties
Original languageEnglish
QualificationDoctor of Philosophy
Awarding Institution
Supervisors/Advisors
  • Berk, Jan Marc, Supervisor
  • Jacobs, Jan, Co-supervisor
  • Heijdra, Ben, Assessment committee
  • de Vries, C.G. (Casper George), Assessment committee, External person
  • Smets, Frank R, Assessment committee
Award date22-Mar-2018
Place of Publication[Groningen]
Publisher
Print ISBNs978-94-034-0525-4
Electronic ISBNs978-94-034-0524-7
Publication statusPublished - 2018

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