The institutional memory hypothesis and the procyclicality of bank lending behavior by Allen N. Berger

Cover of: The institutional memory hypothesis and the procyclicality of bank lending behavior | Allen N. Berger

Published by Federal Reserve Board in Washington, D.C .

Written in English

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Subjects:

  • Bank loans.,
  • Business cycles.

Edition Notes

Book details

StatementAllen N. Berger and Gregory F. Udell.
SeriesFinance and economics discussion series ;, 2003-02, Finance and economics discussion series (Online) ;, 2003-02.
ContributionsUdell, Gregory F., 1946-
Classifications
LC ClassificationsHG1
The Physical Object
FormatElectronic resource
ID Numbers
Open LibraryOL3389854M
LC Control Number2004616545

Download The institutional memory hypothesis and the procyclicality of bank lending behavior

First, the change in lending behavior under the institutional memory hypothesis is based on the bank's own cycle and experience, whereas the other theories of procyclicality are usually based primarily on the aggregate business by:   Stylised facts suggest that bank lending behaviour is highly procyclical.

We offer a new hypothesis that may help explain why this occurs. The institutional memory hypothesis is driven by deterioration in the ability of loan officers over the bank.s lending Cited by: Institutional memory hypothesis and the procyclicality of bank lending behaviour.

Basel, Switzerland: Bank for International Settlements, Monetary and Economic Dept., (OCoLC)   "Stylized facts suggest that bank lending behavior is highly procyclical.

We offer a new hypothesis that may help explain why this occurs. The institutional memory hypothesis is driven by deterioration in the ability of loan officers over the bank's lending cycle that results in an easing of credit standards. This easing of standards may be compounded by simultaneous deterioration in the.

The Institutional Memory Hypothesis and the Procyclicality of Bank Lending Behavior Allen N. Berger Board of Governors of the Federal Reserve System Washington, DC U.S.A. Wharton Financial Institutions Center Philadelphia, PA U.S.A. [email protected] Gregory F. Udell Kelley School of Business, Indiana University.

Finance and Economics Discussion Series: The Institutional Memory Hypothesis and the Procyclicality of Bank Lending Behavior [Allen N. Berger, Gregory F. Udell, United States Federal Reserve Board] on *FREE* shipping on qualifying offers.

Stylized facts suggest that bank lending behavior is highly procyclical. We offer a new hypothesis that may help explain why this s: Allen N. Berger, Gregory F. Udell. Downloadable. Stylized facts suggest that bank lending behavior is highly procyclical.

We offer a new hypothesis that may help explain why this occurs. The institutional memory hypothesis is driven by deterioration in the ability of loan officers over the bank's lending cycle that results in an easing of credit standards.

This easing of standards may be compounded by simultaneous deterioration. summarized into “disaster myopia,” “herding behavior,” and “institutional memory hypothesis” from the behav-ioral finance perspective.

It is generally believed that the overall business cycle is the most direct attribute to the bank lending procyclicality. Minsky () found that bank lending behaviors would be subject to the business.

Downloadable. Author(s): Allen N. Berger & Gregory F. Udell. Abstract: Stylised facts suggest that bank lending behaviour is highly procyclical. We offer a new hypothesis that may help explain why this occurs. The institutional memory hypothesis is driven by deterioration in the ability of loan officers over the bank.s lending cycle that results in an easing of credit standards.

Procyclical Behavior of Institutional Investors during the Recent Financial Crisis: Causes, Impacts, and Challenges. Prepared by Michael. Papaioannou, Joonkyu Park, Jukka Pihlman, and Han van der Hoorn. Authorized for distribution by Luc Everaert. September Abstract. This paper (i) provides evidence on the procyclical investment Cited by: Author of The institutional memory hypothesis and the procyclicality of bank lending behavior, Did U.S.

bank supervisors get tougher during the credit crunch. Did they get easier during the banking boom. Did it matter to bank lending?, Small business credit scoring and credit availability, A more complete conceptual framework for financing of small and medium enterprises, The ability of banks.

The institutional memory hypothesis and the procyclicality of bank lending behavior "Stylized facts suggest that bank lending behavior is highly procyclical. We offer a new hypothesis that may help explain why this occurs.

The institutional memory hypothesis is driven by deterioration in the. The Procyclicality of Foreign Bank Lending: Evidence from the Global Financial Crisis Ugo Albertazziyand Margherita Botteroz 30 May Abstract We exploit highly disaggregated bank-–rm data to investigate the dynamics of foreign vs domestic credit supply in Italy around the period of the Lehman collapse,Cited by: The institutional memory hypothesis is driven by deterioration in the ability of loan officers over the bank's lending cycle that results in an easing of credit standards.

Lending is the principal activity for commercial banks. Growth in a bank’s loan portfolio is therefore a key measure of banks performance. The general objective of this study was to evaluate the effect of growth in loan portfolio on financial performance of commercial banks in Kenya.

Specifically the study was seeking to evaluate the effect of growth in commercial bank’s loan book, the. bank’s lending behaviour on loan losses of listed commercial banks in Ke nya. Objectives of the Study: The purpose of this study is to establish the effect banks ’ lending behaviour on loan.

BANK CAPITAL AND LENDING BEHAVIOR: EMPIRICAL EVIDENCE FOR ITALY by Leonardo Gambacorta* and Paolo Emilio Mistrulli* This version: Febru Abstract This paper investigates the existence of cross-sectional differences in the response of lending to monetary policy and GDP shocks due to a different degree of bank capitalization.

As for the institutional memory hypothesis, it stresses that current loan officers ease credit standards over time. The previous loan bust is not remembered because of loan officer turnover. The literature which analyses fluctuations in bank lending also focuses on the impact of monetary policy by:   The book leans on the existing literature and the relevant international experience to assess the challenges Ahmed, A., Takeda, C., Thomas, S., Bank loan loss provisions: A Re-examination of capital management, earnings management and signaling effects.

The institutional memory hypothesis and the procyclicality of bank lending. The institutional memory hypothesis and the procyclicality of bank lending behavior.

BIS Working Papers No / Google Scholar. Bikker, J.A., Hu, H., Cyclical Patterns in Profits, Provisioning and Lending of Banks and Procyclicality of the New Basel Capital Requirements. DNB Staff Report, No. 86, De Nederlandsche : Platon Monokroussos, Dimitrios Thomakos, Thomas A.

Alexopoulos, Eleni Lydia Tsioli, Eleni Lydia Tsio. “The Institutional Memory Hypothesis and the Procyclicality of Bank Lending Behavior,” Journal of Financial Intermediation, with Allen N. Berger (forthcoming). “The Past, Present and Probable Future of Community Banks,” Journal of Financial Services Research, with William C.

This paper empirically evaluates the impact of bank capital on lending patterns of commercial banks in the United States.

We construct an unbalanced quarterly panel of around seven thousand medium sized commercial banks over sixty quarters, from to Using two different measures of capital namely the capital adequacy ratio and tier 1 ratio, we find a moderate relationship between bank.

we examine whether the extent of procyclicality of bank lending changed after the financial crisis and also test our hypothesis that if the share of wholesale funding increases, then procyclicality increases. We find that after the financial crisis, the procyclicality of bank behavior in corporate lending augmented.

This study analyzes the relationship between housing prices and bank performance in Korea. To this end, using lending growth, return on assets, and non-performing loans as a performance measure, we estimate fixed-effects models for each measure.

Major empirical results are summarized as follows. First, fluctuations in housing prices affect the banks’ lending : Youngkyung Ok, Jungmu Kim, Yuen Jung Park.

"The Institutional Memory Hypothesis and the Procyclicality of Bank Lending Behavior." Journal of Financial Intermediation, 13, a, "A More Complete Conceptual Framework for SME Finance." Presented at the World Bank Conference on Small and Medium Enterprises: Overcoming Growth Constraints, World Bank, b.

“The Institutional Memory Hypothesis and the Procyclicality of Bank Lending Behavior,” (with Gregory F. Udell), Journal of Financial Intermediation 13 (October ), “The Dynamics of Market Entry: The Effects of Mergers and Acquisitions on Entry in the Banking. The New Theory of Commercial Banking and Bank Lending Behavior Scottish Journal of Political Economy, Vol.

52, No. 5, pp.November 24 Pages Posted: 29 Dec Cited by: 2. Banks, Herding and Regulation: a Review and Synthesis Published by Guset User, Description: Banks, Herding and Regulation: a Review and Synthesis Peter R. HAISS* Abstract I review theory and empirical evidence on herd behaviour by banks.

7 Monetary Policy and Bank Lending Anil K. Kashyap and Jeremy C. Stein In this paper, we survey recent theoretical and empirical work that relates to the “lending” channel of monetary policy transmission. To begin, we need to define clearly what is meant by the lending channel. It. Procyclicality of US Bank Leverage Christian Laux (GDP growth and changes in VIX), the initial leverage, the market-to-book-ratio, and di erent regulatory capital measures (total regulatory capital ratio and changes in the bank behavior in which they show Cited by: 9.

THE NEW THEORY OF COMMERCIAL BANKING AND BANK LENDING BEHAVIOR Pekka Ahtialan Abstract This paper studies the bank’s lending decision, based on three observed phenomena: banks earn substantial profits from off-balance sheet activities and services, which they take into account in their lending decisions.

Secondly, the critical point in theCited by: 2. “The Institutional Memory Hypothesis and the Procyclicality of Bank Lending Behavior,” Journal of Financial Intermediation, with Allen N. Berger (October ). “The Past, Present and Probable Future of Community Banks,” Journal of Financial Services Research, with Robert DeYoung and William C.

Hunter (April ). Bank loans represent a source of income for banks. Indeed, the main purpose of financial intermediation of banks is to grant a profitable loans. In the context of this article, we studied the internal factors and external factors of bank credits in Tunisia using a panel data through a sample of 18 banks in the period ().

We found that among the internal factors, only the return on. introduction - BBR Brazilian Business Review Feb 1, - model with accounting and macroeconomic variables, which could theoretically lead banks to pro-cyclical or countercyclical behavior, which reinforces the need for research to indicate what has actually been the effect of these provisions in the economy.

The purpose of this paper. Portfolio Theory and Bank Lending. Posted on 7/1/ Financial portfolio theory provides practical insights into how a bank should structure a loan portfolio in light of its goals. At the risk of oversimplification, a bank’s goals can be seen as threefold: Earn strong profits.

result in procyclical lending behavior. However, Berger and Udell () offer a novel alternative hypothesis – the institutional memory hypothesis – which states that the abilities of loan officers to monitor risky loans deteriorates over the business cycle. To link to the entire object, paste this link in email, IM or document To embed the entire object, paste this HTML in website To link to this page, paste this link in email, IM or document To embed this page, paste this HTML in website.

Berger, A. and G. Udell (), The institutional memory hypothesis and the procyclicality of bank lending behavior, Journal of Financial Intermediation, 13, Bolton, P. And D.S. Scharfstein (), Optimal debt structure and the number of creditors, Journal of Political Economy, (1), 1 The effects of capital on bank lending of EU large banks – The role of procyclicality, income smoothing, regulations and supervision.

Małgorzata Olszaka,1, Mateusz Pipieńb, Sylwia Roszkowskac, Iwona Kowalskad a Department of Banking and Money Markets, Faculty of Management, University of Warsaw, Poland b Department of Econometrics and Operations Research, Cracow University of Economics.

loan book, in accordance with a formula set out by the central bank Berger, A./Udell, G. []: The institutional memory hypothesis and the procyclicality of bank lending behavior, in: Journal of Financial Intermediation, vol. 13, no. 04/, pp. A Theoretical and Empirical Assessment of the Bank Lending Channel and Loan Market Disequilibrium in Poland Christophe Hurlin∗,RafałKierzenkowski∗∗1 Abstract We study the impact of the bank lending channel and loan market disequilibrium on the efficiencyof the monetarypolicy transmissioninPolandsince First, we developa.estimated heterogeneity in bank-level lending responses to monetary policy will be biased.

These distortions would also show up in any estimates of -statelevel differences in the lending channel based on the distribution of bank characteristics. Motivated by these possibilities, we evaluate the heterogeneity in bank lending responses.Procyclicality of US Bank Leverage interpretation of results.3 The authors regress the growth rate of a bank’s book leverage on the growth rate of its total book assets.

Leverage is procyclical if the regression coe cient leverage procyclicality in the period before and after the widespread introduction of fair.

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