De-leveraging, de-risking and moral suasion in the banking sector

Michele Fratianni and Francesco Marchionne ()

No 103, Mo.Fi.R. Working Papers from Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences

Abstract: This paper examines how banks around the world have resized and reallocated their earning assets in response to the subprime and sovereign debt crises. We also focus on the interaction between sovereign debt and the asset allocation process. We find that banks have readjusted asset shares and the overall regulatory credit risk by substituting government securities for loans. Furthermore, they have been sensitive to those variables that are of direct interest to the regulator, a result that is consistent with high-debt governments having exerting moral suasion on banks to privilege the purchase of government securities over credit to the private sector.

Keywords: crisis; loans; moral suasion; regulator; securities (search for similar items in EconPapers)
JEL-codes: G01 G11 G21 G28 (search for similar items in EconPapers)
Pages: 28
Date: 2015-01
New Economics Papers: this item is included in nep-ban and nep-cfn
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Persistent link: https://EconPapers.repec.org/RePEc:anc:wmofir:103

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