Bank Credit and Economic Activity (original) (raw)

AI-generated Abstract

The paper investigates the effect of bank loan supply fluctuations on economic activity across various countries, including those in Europe, Latin America, and East Asia. Using an unrestricted VAR methodology, the study finds that disturbances in bank loan supply significantly impact GDP, with findings aligning with previous research. The analysis further reveals that the effects of loan supply shocks persist longer in the US compared to other regions, highlighting the critical role of bank lending in economic dynamics.