IDEAS home Printed from https://ideas.repec.org/p/imf/imfwpa/1998-093.html
   My bibliography  Save this paper

Bank Lending and Interest Rate Changes in a Dynamic Matching Model

Author

Listed:
  • Mr. Giovanni Dell'Ariccia
  • Mr. Pietro Garibaldi

Abstract

This paper presents theory and evidence on the dynamic relationship between aggregate bank lending and interest rate changes. Theoretically, it proposes and solves a stochastic matching model where credit expansion and contraction are time consuming. It shows that the response of bank lending to changes in money market rates is likely to be asymmetric and depends crucially on two structural parameters: the speed at which new loans become available, and the speed at which banks recall existing loans. Empirically, it provides evidence that bank lending in Mexico and the United States responds asymmetrically to positive and negative shocks in money market rates.

Suggested Citation

  • Mr. Giovanni Dell'Ariccia & Mr. Pietro Garibaldi, 1998. "Bank Lending and Interest Rate Changes in a Dynamic Matching Model," IMF Working Papers 1998/093, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:1998/093
    as

    Download full text from publisher

    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=2656
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. den Haan, Wouter J. & Ramey, Garey & Watson, Joel, 2003. "Liquidity flows and fragility of business enterprises," Journal of Monetary Economics, Elsevier, vol. 50(6), pages 1215-1241, September.
    2. Luis Araujo & Qingqing Cao & Raoul Minetti & Pierluigi Murro, 2019. "Credit Crunches, Asset Prices and Technological Change," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 32, pages 153-179, April.
    3. repec:cdl:ucsdec:99-07r is not listed on IDEAS
    4. Saini, Seema & Ahmad, Wasim, 2024. "Credit creation, credit destruction and credit reallocation: Firm-level evidence from India," Journal of Asian Economics, Elsevier, vol. 92(C).
    5. Ben R. Craig & Joseph G. Haubrich, 2013. "Gross Loan Flows," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 45(2‐3), pages 401-421, March.
    6. Danilo Liberati, 2018. "An estimated DSGE model with search and matching frictions in the credit market," International Journal of Monetary Economics and Finance, Inderscience Enterprises Ltd, vol. 11(6), pages 567-617.
    7. Isoré, Marlène, 2016. "International propagation of financial shocks in a search and matching environment," Bank of Finland Research Discussion Papers 28/2016, Bank of Finland.
    8. repec:cdl:ucsdec:99-07 is not listed on IDEAS
    9. Herrera, Ana Maria & Kolar, Marek & Minetti, Raoul, 2011. "Credit reallocation," Journal of Monetary Economics, Elsevier, vol. 58(6), pages 551-563.
    10. repec:wsr:wpaper:y:2011:i:068 is not listed on IDEAS
    11. Florio, Anna, 2006. "The asymmetric effects of monetary policy in a matching model with a balance sheet channel," Journal of Macroeconomics, Elsevier, vol. 28(2), pages 375-391, June.
    12. Marlène Isoré, 2011. "International Propagation of Financial Shocks in a Search and Matching Environment," FIW Working Paper series 068, FIW.
    13. repec:zbw:bofrdp:2016_028 is not listed on IDEAS
    14. Anna Florio, 2004. "The Asymmetric Effects of Monetary Policy," Journal of Economic Surveys, Wiley Blackwell, vol. 18(3), pages 409-426, July.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:imf:imfwpa:1998/093. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Akshay Modi (email available below). General contact details of provider: https://edirc.repec.org/data/imfffus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.