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Financial structures and the real effects of credit-supply shocks in Denmark 1922-2011

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  • Kim Abildgren

Abstract

We examine the real effects of credit shocks using a series of structural vector autoregressive models estimated on the basis on a new quarterly data set for Denmark spanning the past 90 years or so. We find no evidence of real macroeconomic effects from supply shocks to credit from commercial/savings banks in the periods 1922-1938 and 1981-2011 even though these periods contained several cases of severe banking crises. We attribute these findings to the special role played by bond-financed mortgage banks in the Danish financial system combined with comprehensive government interventions to safeguard financial stability during times of banking crises. Copyright , Oxford University Press.

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  • Kim Abildgren, 2012. "Financial structures and the real effects of credit-supply shocks in Denmark 1922-2011," European Review of Economic History, European Historical Economics Society, vol. 16(4), pages 490-510, November.
    • Handle: RePEc:oup:ereveh:v:16:y:2012:i:4:p:490-510
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    Cited by:

    1. Bylund, Emma & Iversen, Jens & Vredin, Anders, 2023. "Monetary policy in Sweden after the end of Bretton Woods," Working Paper Series 429, Sveriges Riksbank (Central Bank of Sweden).
    2. Kim Abildgren, 2016. "A century of macro-financial linkages," Journal of Financial Economic Policy, Emerald Group Publishing Limited, vol. 8(4), pages 458-471, November.
    3. Bijsterbosch, Martin & Falagiarda, Matteo, 2014. "Credit supply dynamics and economic activity in euro area countries: a time-varying parameter VAR analysis," Working Paper Series 1714, European Central Bank.
    4. Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "The Aftermath of Financial Crises," American Economic Review, American Economic Association, vol. 99(2), pages 466-472, May.
    5. Abou-Zeinab , Ali, 2013. "Patterns of Bank Credit Allocation and Economic Growth: The Case of Denmark, 1736-2012," Lund Papers in Economic History 131, Lund University, Department of Economic History.
    6. Gregor Bäurle & Rolf Scheufele, 2019. "Credit cycles and real activity: the Swiss case," Empirical Economics, Springer, vol. 56(6), pages 1939-1966, June.
    7. Lingxiao Li & Bing Zhu, 2020. "Housing Wealth, Consumption Channels and Mortgage Liberalization," International Real Estate Review, Global Social Science Institute, vol. 23(4), pages 433-465.
    8. Gabriel Rodríguez & Carlos Guevara, 2018. "The Role of Loan Supply Shocks in Pacific Alliance Countries: A TVP-VAR-SV Approach," Documentos de Trabajo / Working Papers 2018-467, Departamento de Economía - Pontificia Universidad Católica del Perú.
    9. Bijsterbosch, Martin & Falagiarda, Matteo, 2015. "The macroeconomic impact of financial fragmentation in the euro area: Which role for credit supply?," Journal of International Money and Finance, Elsevier, vol. 54(C), pages 93-115.
    10. Emma Bylund & Jens Iversen & Anders Vredin, 2024. "Monetary Policy in Sweden After the End of Bretton Woods," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 66(3), pages 535-590, September.
    11. Guevara, Carlos & Rodríguez, Gabriel, 2020. "The role of credit supply shocks in pacific alliance countries: A TVP-VAR-SV approach," The North American Journal of Economics and Finance, Elsevier, vol. 52(C).
    12. Milcheva, Stanimira, 2013. "A bank lending channel or a credit supply shock?," Journal of Macroeconomics, Elsevier, vol. 37(C), pages 314-332.
    13. Romain Houssa & Jolan Mohimont & Chris Otrok, 2013. "Credit Shocks and Macroeconomic Fluctuations in Emerging Markets," CESifo Working Paper Series 4281, CESifo.

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    More about this item

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • N14 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: 1913-

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