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Domestic Credit in Times of Supervision: an Empirical Investigation of European Countries

Authors
  • Jobert, Thomas
  • Monahov, Alexandru
  • Tykhonenko, Anna
Publication Date
Jan 01, 2015
Source
HAL-UPMC
Keywords
Language
English
License
Unknown
External links

Abstract

We study the impact of prudential supervision on domestic credit in 27 European countries throughout 1999-2012. We use the Empirical Iterative Bayes estimator to account for country heterogeneity. We find: (i) the interest rate not to be a fundamental variable in explaining domestic credit, (ii) negative relations between credit sensitivity to past investment and to financial dependence, (iii) that the effects of supervision on credit differ by country, but (iv) that it is possible to achieve an increase in supervisory stringency with positive effects on credit in the context of unified financial supervision.

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