05321oam 22011534 450 991078834280332120230721045647.01-4623-5881-01-4527-4907-897866128419961-4518-7106-61-282-84199-8(CKB)3170000000055144(EBL)1608063(SSID)ssj0000943980(PQKBManifestationID)11612509(PQKBTitleCode)TC0000943980(PQKBWorkID)10982471(PQKB)10948551(OCoLC)874177680(MiAaPQ)EBC1608063(IMF)WPIEE2008248(EXLCZ)99317000000005514420020129d2008 uf 0engurcnu||||||||txtccrBanks’ Precautionary Capital and Persistent Credit Crunches /Fabian ValenciaWashington, D.C. :International Monetary Fund,2008.1 online resource (37 p.)IMF Working PapersIMF working paper ;WP/08/248Description based upon print version of record.1-4519-1559-4 Includes bibliographical references.Contents; I. Introduction; II. Banks and the Real Economy; III. The Model; A. The Loan Contract; B. The Bank's Optimization Problem; C. Solution; D. Risk and the Target Level of Solvency; IV. Quantitative Experiments; V. Bank Recapitalization; VI. Conclusions; Figures; 1. Bank Credit as Percentage of GDP, Selected Countries; 2. Optimal Policy Functions; 3. Target Level of Solvency; 4. Responses to a Negative Transitory Productivity Shock; 5. Responses to an Interest Rate Increase; 6. Responses to a Large Negative Shock, With and Without Recapitalization7. Credit Crunch Severity and Bank Recapitalization Tables; 1. Bank's Sequence of Events; 2. Public Recapitalization Costs for Selected Crises Episodes; 3. Sensitivity Analysis to a 2-σ Productivity Shock; 4. Bank's Solvency Regions; Appendix; 8. Deposit Interest Rate; ReferencesPeriods of banking distress are often followed by sizable and long-lasting contractions in bank credit. They may be explained by a declined demand by financially impaired borrowers (the conventional financial accelerator) or by lower supply by capital-constrained banks, a "credit crunch". This paper develops a bank model to study credit crunches and their real effects. In this model, banks maintain a precautionary level of capital that serves as a smoothing mechanism to avert disruptions in the supply of credit when hit by small shocks. However, for larger shocks, highly persistent credit crunches may arise even when the impulse is a one time, non-serially correlated event. From a policy perspective, the model justifies the use of public funds to recapitalize banks following a significant deterioration in their capital position.IMF Working Papers; Working Paper ;No. 2008/248Financial crisesUnited StatesEconometric modelsBank capitalUnited StatesEconometric modelsBank failuresUnited StatesEconometric modelsCreditUnited StatesEconometric modelsRiskUnited StatesEconometric modelsBanks and BankingimfFinance: GeneralimfMoney and Monetary PolicyimfIndustries: Financial ServicesimfBanksimfDepository InstitutionsimfMicro Finance InstitutionsimfMortgagesimfMonetary Policy, Central Banking, and the Supply of Money and Credit: GeneralimfBankruptcyimfLiquidationimfBankingimfMonetary economicsimfFinanceimfCreditimfBank creditimfSolvencyimfLoansimfBanks and bankingimfDebtimfUnited StatesimfFinancial crisesEconometric models.Bank capitalEconometric models.Bank failuresEconometric models.CreditEconometric models.RiskEconometric models.Banks and BankingFinance: GeneralMoney and Monetary PolicyIndustries: Financial ServicesBanksDepository InstitutionsMicro Finance InstitutionsMortgagesMonetary Policy, Central Banking, and the Supply of Money and Credit: GeneralBankruptcyLiquidationBankingMonetary economicsFinanceCreditBank creditSolvencyLoansBanks and bankingDebt330.973Valencia Fabian1493480DcWaIMFBOOK9910788342803321Banks’ Precautionary Capital and Persistent Credit Crunches3716479UNINA