Creditor Rights and the Bank Lending Channel of Monetary Policy

Olmo, Begoña Torre; Azofra, Sergio Sanfilippo; Sáiz, María Cantero

doi:10.1007/978-3-319-70007-6_6

Cited by 2 publications

(8 citation statements)

References 31 publications

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“…Nevertheless, since the slope of the marginal effect was negative, the increase in trade credit receivables is less pronounced as the value of the creditor rights index increases, which would support our Hypothesis 1. Bank lending in countries with stronger creditor rights is less affected by monetary restrictions, so firms would require less trade credit as an alternative source of finance (Torre-Olmo et al, 2018). As a result, the provision of this source of finance would be reduced.…”

Section: Resultsmentioning

confidence: 99%

“…Houston et al (2010), analyzed 69 countries and revealed that stronger creditor rights encourage banks to provide lending to riskier borrowers because they have greater protection in the event of default. Torre-Olmo et al (2018) show that, in countries with stronger creditor protection, loan supply is less likely to decrease after monetary restrictions.…”

Section: Literature Reviewmentioning

confidence: 95%

“…In-depth research into the role of creditor rights on the trade credit channel of monetary policy and how this role is shaped by the global financial crisis is necessary. Although some articles have studied the impact of creditor rights on bank lending (Delannay & Weill, 2004; Djankov et al, 2007; Houston et al, 2010), or how these rights determine the effect of monetary policy on bank lending (Torre-Olmo et al, 2018), none have examined how creditor rights affect monetary policy transmission through trade credit.…”

Section: Introductionmentioning

confidence: 99%

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Creditor rights, monetary policy, financial crisis, and trade credit

Cantero-Saiz

Torre-Olmo

Azofra

2021

BRQ Business Research Quarterly

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This article analyses how creditor rights affect the trade credit channel of monetary policy. We also aim to test whether these effects were conditioned by the global financial crisis of 2008. Using a sample of 15,356 firms from 29 countries (2001–2017), we found that in normal times or in countries not very severely affected by the financial crisis, trade credit receivables increase during monetary restrictions. Moreover, this increase is less pronounced as creditor protection strengthens. In countries strongly affected by the financial crisis, however, trade credit receivables do not react or even decrease after monetary expansions, regardless of the degree of creditor protection. Furthermore, the results of trade credit payables and net trade credit are not conclusive. JEL CLASSIFICATION: E52; K22; G32

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Section: Resultsmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 95%

Section: Introductionmentioning

confidence: 99%

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Creditor rights, monetary policy, financial crisis, and trade credit

Cantero-Saiz

Torre-Olmo

Azofra

2021

BRQ Business Research Quarterly

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“…The collapse option effectively constrains all of the yearly moment conditions to be the same and reduces the instrument count and the number of moment conditions used in the difference-in-Hansen test of exogeneity instrument subsets, which makes this test more powerful [90,91]. Many articles have collapsed the instruments used in the System-GMM estimation [69,92,93].…”

Section: Methodsmentioning

confidence: 99%

“…The exogenous variables were instrumented by themselves. We also collapsed the instruments used in our estimation [92,93]. Moreover, we carried out the F-statistics test to assess instrument strength.…”

Section: Methodsmentioning

confidence: 99%

Sustainable Banking, Market Power, and Efficiency: Effects on Banks’ Profitability and Risk

2021

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The financial crisis seriously damaged the reputation of the banking sector, as well as its profitability and risk of insolvency, which led many banks to adopt a sustainable approach aimed at balancing long-term goals with short-term performance pressures. This article analyses how sustainable banking practices affect the profitability and the insolvency risk of banks. Moreover, we examine how sustainable strategies determine the effects of market power and efficiency on bank profitability. We used a two-step System-GMM to analyze an unbalanced panel of 1236 banks from 48 countries over the period 2015–2019. We found that sustainable banking practices increased profitability, and market power was an important determinant of profitability among conventional banks, but not among sustainable banks. Higher levels of cost scale efficiency led to greater profitability for both sustainable and conventional banks. However, there was no significant relationship between sustainable banking and insolvency risk. These results indicate that the traditional determinants of bank profitability are not relevant in explaining the superior profits of sustainable banks, which suggests the emergence of a new paradigm related to sustainability among the drivers of bank profitability.

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Creditor Rights and the Bank Lending Channel of Monetary Policy

Cited by 2 publications

References 31 publications

Creditor rights, monetary policy, financial crisis, and trade credit

Creditor rights, monetary policy, financial crisis, and trade credit

Sustainable Banking, Market Power, and Efficiency: Effects on Banks’ Profitability and Risk

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