Title: Does bank lending affect output? evidence from the U.S. states
First published: 2003
Description: "This paper uses a panel of state-level data to test whether changes in bank loan supply affect output.  Since the U.S.  states are small open economies with fixed exchange rates, state-specific shocks to money demand are automatically accommodated, leading to changes in lending if banks rely on deposits as a source of funding.  Using these shocks as an instrumental variable, I find that shocks to money demand have large and statistically significant effects on the supply of bank loans, but loans have small, often negative, and statistically insignificant effects on output"--Federal Reserve Board web site.
Subjects: States, Demand for money, Bank loans
Places: United States
LC classification: HG1