What question did this study set out to answer?

The research aims to analyze how low short-term interest rates influence lending standards and economic performance.

May 18, 2011Review of Financial Studies546 citations

Bank Risk-Taking and Lending Standards Under Low Interest Rates

Bank Risk-taking, Securitization, Supervision, and Low Interest Rates: Evidence from the Euro-area and the U.S. Lending Standards

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Authors

ÁMÁngela Maddaloni JPJosé‐Luis Peydró

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Overview

Randomized trial examines how low rates affect lending standards in Euro-area and U.S., suggesting vital regulatory insights.

Key Points

The research aims to analyze how low short-term interest rates influence lending standards and economic performance.
Utilized a unique dataset of bank lending standards from the Euro-area and the U.S.
Examined the relationship between interest rates, lending practices, and economic outcomes.
Analyzed the impact of securitization activity and bank supervision on lending standards.
Low short-term interest rates soften lending standards for household and corporate loans.
Softening of standards is amplified by securitization activity and weak capital supervision.
Countries with initially softer lending standards and negative Taylor rule residuals faced worse economic outcomes post-crisis.

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Cite This Study

Maddaloni et al. (2011) studied this question.

synapsesocial.com/papers/6a09b8f1b0d552aa8b45d9e3 https://doi.org/10.1093/rfs/hhr015

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May 18, 2011Review of Financial Studies546 citations

Bank Risk-Taking and Lending Standards Under Low Interest Rates

Bank Risk-taking, Securitization, Supervision, and Low Interest Rates: Evidence from the Euro-area and the U.S. Lending Standards

View Full Paper

Authors

ÁMÁngela Maddaloni JPJosé‐Luis Peydró

Discussion

Member takes

Overview

Randomized trial examines how low rates affect lending standards in Euro-area and U.S., suggesting vital regulatory insights.

Key Points

The research aims to analyze how low short-term interest rates influence lending standards and economic performance.
Utilized a unique dataset of bank lending standards from the Euro-area and the U.S.
Examined the relationship between interest rates, lending practices, and economic outcomes.
Analyzed the impact of securitization activity and bank supervision on lending standards.
Low short-term interest rates soften lending standards for household and corporate loans.
Softening of standards is amplified by securitization activity and weak capital supervision.
Countries with initially softer lending standards and negative Taylor rule residuals faced worse economic outcomes post-crisis.

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Helpful

Bookmark

View Full Paper

Cite This Study

Maddaloni et al. (2011) studied this question.

synapsesocial.com/papers/6a09b8f1b0d552aa8b45d9e3 https://doi.org/10.1093/rfs/hhr015

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