Without help from the eurozone's central bank, Italy could go the way of Greece, Portugal and Ireland, which rely on loans supplied directly from the treasury departments of eurozone countries.
Since studies showed that tight loan supply was partly to blame, a new tool, the Funding for Lending scheme (FLS), was created in 2012.
American experience shows that when banks' borrowing rates return to normal, helping loan supply, business lending can rebound quickly in a growing economy.
The economic impact of a legal change on bank lending is considerable; an improvement of our legal indicator by one implies an increase in loan supply by 13.66%.
The bank loan supply under the constraint of the required liquidity buffer might have different prescriptions under different economic scenarios, and would eventually result in an equilibrium monetary stock correspondingly.
Decreased loan supply would then lower aggregate demand and collateral values, further reducing access to finance and thereby economic activity, and in turn, increasing losses to the financial sector," the IMF warns.
Second, loan supply relates positively to interest rates.
Third, loan supply relates positively to mobile money balances.
First, loan supply is related to the macro- economy (( tau )), such that the more unfavourable the macro-economy, the lower the loan supply.
However, previous studies have found that rapid loan supply worsens balance sheet strength.
