Search Frictions, Credit Market Liquidity and Net Interest Margin Cyclicality

Bibliographic Data

ID9722217
AuthorsKevin E Beaubrun‐Diant (Université Paris‐Dauphine – LEDa), Kévin Beaubrun-Diant (0000-0002-1852-5417, Laboratoire d’Economie de Dauphine), Fabien Tripier (0000-0002-2942-1461, University of Lille 1 ‐ Clersé & Cepii)
Year2015
Volume82
Issue325
Pages79-102
Publication date2015-01-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueEconomica (JOURNAL)
Journal identifiersISSN: 0013-0427 • E-ISSN: 1468-0335
PublisherWiley (PUBLISHER • GB)
DOI10.1111/ecca.12101
OpenAlexW2232874884
LanguageEN
References cited27

This paper contributes to the body of knowledge on search frictions in credit markets by demonstrating their ability to explain why the net interest margins of banks behave countercyclically. During periods of expansion, a fall in the net interest margin proceeds from two mechanisms: (i) lenders accept that they must finance entrepreneurs who have lower productivity; (ii) the liquidity of the credit market rises, which simplifies access to loans for entrepreneurs and thereby reinforces their threat point when bargaining the interest rate of the loan

Bond market · Business · Credit crunch · Economics · Financial system · Interest rate · Loan · Margin (machine learning) · Market liquidity · Monetary economics · Net interest margin · Point (geometry) · Profitability index · Banking stability, regulation, efficiency · Corporate Finance and Governance · Economic theories and models · Finance

Tools

Open DOISci-Hub