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Assessing the credit creation process under the Basel III framework: Some evidence from the Eurozone

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  • Economou, Fotini
  • Panagopoulos, Yannis

Abstract

This paper re-examines the exogeneity/endogeneity debate regarding the credit creation process for the Eurozone banking system under the Basel III framework. A two-stage theoretical approach is employed to assess an equity/credit multiplier model and a credit creation model. The results reveal the existence of a mixed outcome (driven by aggregate demand and Basel III factors) regarding the credit creation process for the sample countries and the period under examination. The active but limited effectiveness of the Basel III factors upon the Eurozone banking system is revealed, providing important information for policymakers.

Suggested Citation

  • Economou, Fotini & Panagopoulos, Yannis, 2023. "Assessing the credit creation process under the Basel III framework: Some evidence from the Eurozone," Finance Research Letters, Elsevier, vol. 51(C).
    • Handle: RePEc:eee:finlet:v:51:y:2023:i:c:s1544612322006055
    DOI: 10.1016/j.frl.2022.103428
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    More about this item

    Keywords

    Endogenous/exogenous money creation; Basel III; Covid-19;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers

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