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A Note on US Excess Bank Reserves and the Credit Contraction (Khemraj T.)

Bank Lending Financial Crises Interest Rates Liquidity

Abstract This paper reports aggregate bank excess liquidity preference curves for the pre-crisis and crisis periods. It is argued that the flat curve reflects a threshold lending rate at which point banks accumulate reserves passively. Moreover, the expansion of reserves – when the lending rate threshold is binding – does not lead to credit expansion. The latter would require policies that directly increase the demand for loans, particularly by the business sector.
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Libref/ Khemraj T. (2009) “A Note on US Excess Bank Reserves and the Credit Contraction”, MPRA Paper No. 18702, pp. 1-10
© Программирование — Александр Красильников, 2008
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