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Securities trading by banks and credit supply: Micro-evidence from the crisis

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dc.contributor.author Abbassi, Puriya
dc.contributor.author Iyer, Rajkamal
dc.contributor.author Peydró, José-Luis
dc.contributor.author Tous, Francesc R.
dc.contributor.other Universitat Pompeu Fabra. Departament d'Economia i Empresa
dc.date.accessioned 2020-05-25T09:27:00Z
dc.date.available 2020-05-25T09:27:00Z
dc.date.issued 2015-09-01
dc.identifier https://econ-papers.upf.edu/ca/paper.php?id=1654
dc.identifier.citation Journal of Financial Economics, 121:3, 569-94.
dc.identifier.uri http://hdl.handle.net/10230/44746
dc.description.abstract We analyze securities trading by banks during the crisis and the associated spillovers to the supply of credit. We use a proprietary data set that has the investments of banks at the security level for 2005 2012 in conjunction with the credit register from Germany. We find that during the crisis banks with higher trading expertise (trading banks) increase their investments in securities, especially in those that had a larger price drop, with the strongest impact in low-rated and long-term securities. Moreover, trading banks reduce their credit supply, and the credit crunch is binding at the firm level. All of the effects are more pronounced for trading banks with higher capital levels. Finally, banks use central bank liquidity and government subsidies like public recapitalization and implicit guarantees mainly to support trading of securities. Overall, our results suggest an externality arising from fire sales in securities markets on credit supply via the trading behavior of banks.
dc.format.mimetype application/pdf
dc.language.iso eng
dc.relation.ispartofseries Economics and Business Working Papers Series; 1654
dc.rights L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons
dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/3.0/es/
dc.title Securities trading by banks and credit supply: Micro-evidence from the crisis
dc.type info:eu-repo/semantics/workingPaper
dc.date.modified 2020-05-25T09:25:54Z
dc.subject.keyword banking
dc.subject.keyword investments
dc.subject.keyword bank capital
dc.subject.keyword credit supply
dc.subject.keyword public subsidies
dc.rights.accessRights info:eu-repo/semantics/openAccess

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