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Financial intermediation analysis from financial flows

Author

Listed:
  • Claudio Oliveira De Moraes
  • José Americo Pereira Antunes
  • Adriano Rodrigues

Abstract

Purpose - The purpose of this paper is to analyze the financial friction effect of non-performing loans (NPLs) on financial intermediation (FI) through empirical evidence from the Brazilian experience. Design/methodology/approach - The authors develop a new variable, financial intermediation flow and a new indicator, FI, both measures of FI. To empirically test FI, the authors use a dynamic panel data framework that draws on 101 banks (December 2000 to December 2015). Findings - An increase in NPL reduces FI. Thus, NPL amplifies financial friction in FI. This result holds in different time frames, such as the pre-crisis period, the crisis period and the post-crisis period. Practical implications - The FI measure developed in this study offers the policymakers a possibility to monitor financial stability. Originality/value - This study adds to this debate by proposing a measure of FI derived from financial flows. This measure allows one to estimate the role of NPL as a financial friction that can pose a threat to financial stability.

Suggested Citation

  • Claudio Oliveira De Moraes & José Americo Pereira Antunes & Adriano Rodrigues, 2019. "Financial intermediation analysis from financial flows," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 46(3), pages 727-747, August.
    • Handle: RePEc:eme:jespps:jes-10-2017-0302
    DOI: 10.1108/JES-10-2017-0302
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    More about this item

    Keywords

    Credit risk; Financial intermediation; Financial stability; Financial flows; Financial friction; E44; E58; G38;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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