Bank Procyclicality, Credit Crunches, and Asymmetric Monetary Policy Effects: A Unifying Model

9 Pages Posted: 27 Dec 2003

See all articles by Robert R. Bliss

Robert R. Bliss

affiliation not provided to SSRN

George G. Kaufman

Loyola University Chicago

Multiple version iconThere are 2 versions of this paper

Abstract

Much concern has recently been expressed that both large, procyclical changes in bank assets and "credit crunches" caused by banks' reluctance to expand loans during recessions contribute to economic instability. These effects are difficult to explain using the standard textbook model of deposit expansion, in which deposits are constrained only by reserve requirements. However, these effects follow easily if the model is expanded to include a second, capital constraint.

JEL Classification: E51, E32, G21

Suggested Citation

Bliss, Robert R. and Kaufman, George G., Bank Procyclicality, Credit Crunches, and Asymmetric Monetary Policy Effects: A Unifying Model. Available at SSRN: https://ssrn.com/abstract=480962

Robert R. Bliss (Contact Author)

affiliation not provided to SSRN

George G. Kaufman

Loyola University Chicago ( email )

820 North Michigan Avenue
School of Business
Chicago, IL 60611
United States
312-915-7075 (Phone)
312-915-8508 (Fax)

HOME PAGE: http://www.luc.edu/faculty/gkaufma/