Khemraj, Tarron (2009): A note on US excess bank reserves and the credit contraction.
Download (86kB) | Preview
This paper reports aggregate bank excess liquidity preference curves for the pre-crisis and crisis periods. It is argued that the flat curve reflects a threshold lending rate at which point banks accumulate reserves passively. Moreover, the expansion of reserves – when the lending rate threshold is binding – does not lead to credit expansion. The latter would require policies that directly increase the demand for loans, particularly by the business sector.
|Item Type:||MPRA Paper|
|Original Title:||A note on US excess bank reserves and the credit contraction|
|English Title:||A note on US excess bank reserves and the credit contraction|
|Keywords:||bank reserves, minimum loan interest rate, credit crunch|
|Subjects:||E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E40 - General
E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E41 - Demand for Money
G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages
|Depositing User:||Tarron Khemraj|
|Date Deposited:||19. Nov 2009 15:51|
|Last Modified:||26. Aug 2015 06:01|
Age'nor, P., J. Aizenman and A. Hoffmaister, 2004, The credit crunch in East Asia: what can bank excess liquid assets tell us? Journal of International Money and Finance 23, 27-49.
Brunnermeier, M., 2009, Deciphering the liquidity and credit crunch 2007-2008. Journal of Economic Perspectives 23, 77-100.
Clevland, W., 1993, Visualizing Data. (Hobart Press, Summit, NJ).
Edlin, A. and D. Jaffee, 2009, Show me the money. The Economists’ Voice, March.
Feldstein, M., 2009, Inflation is looming on America’s horizon. The Financial Times, April 19.
Hannan, T. and A. Berger, 1991, The rigidity of prices: evidence from the banking industry. American Economic Review 81, 938-945.
Keister, T. and J. McAndrews, 2009, Why are banks holding so many excess reserves? Federal Reserve Bank of New York Staff Report No. 380.
Keister, T., A. Martin and J. McAndrews, 2008, Divorcing money from monetary policy. FRBNY Economic Policy Review, September.
Lindley, J., C. Sowell and W.M.S. Mounts, Jr, 2001, Excess reserves during the 1930s: empirical estimates of the costs of converting unintended cash inventory into income-earning assets. Journal of Economics and Finance 25, 135-148.
Meltzer, A., 2009, Inflation nation. The New York Times, May 4.
Mounts, Jr., W.M. S., C. Sowell and A. and Saxena, 2000, An examination of country member bank cash balances of the 1930s: a test of alternative explanations. Southern Economic Journal 66, 923-941.
Sealey, C. W. and J. Lindley, 1977, Inputs, outputs, and a theory of production and cost at depository financial institutions. Journal of Finance XXXII, 1251-1266.