Arbeitspapier
Fiscal consolidations and bank balance sheets
We empirically investigate the effects of fiscal policy on bank balance sheets, focusing on episodes of fiscal consolidation. To this aim, we employ a very large data set of individual banks' balance sheets, combined with a newly compiled data set on fiscal consolidations. We find that standard capital adequacy ratios such as the Tier-1 ratio tend to improve following episodes of fiscal consolidation. Our results suggest that this improvement results from a portfolio re-balancing from private to public debt securities which reduces the risk-weighted value of assets. In fact, if fiscal adjustment efforts are perceived as structural policy changes that improve the sustainability of public finances and, therefore, reduces credit risk, the banks' demand for government securities should increases relative to other assets.
- Language
-
Englisch
- Bibliographic citation
-
Series: ECB Working Paper ; No. 1511
- Classification
-
Wirtschaft
Fiscal Policy
Portfolio Choice; Investment Decisions
Banks; Depository Institutions; Micro Finance Institutions; Mortgages
Fiscal Policies and Behavior of Economic Agents: General
- Subject
-
bank balance sheets
banking stability
Fiscal consolidations
portfolio re-balancing
- Event
-
Geistige Schöpfung
- (who)
-
Cimadomo, Jacopo
Hauptmeier, Sebastian
Zimmermann, Tom
- Event
-
Veröffentlichung
- (who)
-
European Central Bank (ECB)
- (where)
-
Frankfurt a. M.
- (when)
-
2013
- Handle
- Last update
-
10.03.2025, 11:42 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Cimadomo, Jacopo
- Hauptmeier, Sebastian
- Zimmermann, Tom
- European Central Bank (ECB)
Time of origin
- 2013
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