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Bank Credit, Asset Prices and Financial Stability: Evidence From French Banks

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  • Mr. Cyril Pouvelle

Abstract

This paper analyses the effect of asset prices on credit growth in France and tries to disentangle credit demand and supply factors, both for the whole 1993-2010 period and during periods of financial instability. Using bank-level panel data at a quarterly frequency, stock price growth is shown to have a significant effect on lending growth over the whole period, but without credit supply factors being singled out. By contrast, housing price growth has a significant effect during periods of financial instability only, even after controlling for credit demand effects. These results show that credit demand factors do play a large role but also provide evidence of tighter credit constraints on households in financial instability periods.

Suggested Citation

  • Mr. Cyril Pouvelle, 2012. "Bank Credit, Asset Prices and Financial Stability: Evidence From French Banks," IMF Working Papers 2012/103, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2012/103
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    References listed on IDEAS

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    Cited by:

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    2. Filip, Bogdan Florin, 2014. "Financial-Monetary Instability Factors within the Framework of the Recent Crisis in Romania," Working Papers of National Institute for Economic Research 141213, Institutul National de Cercetari Economice (INCE).
    3. Rashid, Abdul & Hassan, M. Kabir & Shah, Muhammad Abdul Rehman, 2020. "On the role of Islamic and conventional banks in the monetary policy transmission in Malaysia: Do size and liquidity matter?," Research in International Business and Finance, Elsevier, vol. 52(C).
    4. Radivojević, Nikola & Cvijanović, Drago & Sekulic, Dejan & Pavlovic, Dejana & Jovic, Srdjan & Maksimović, Goran, 2019. "Econometric model of non-performing loans determinants," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 520(C), pages 481-488.
    5. Kim, Hyun Jeong & Lee, Dongyeol & Son, Jong Chil & Son, Min Kyu, 2014. "Household indebtedness in Korea: Its causes and sustainability," Japan and the World Economy, Elsevier, vol. 29(C), pages 59-76.

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