During the pandemic, households accumulated savings in their deposit accounts as a result of a reduction in their spending, which occurred due to the restrictions on their mobility. This led to a significant increase in bank deposits for banks located in counties with a larger reduction in spending. Banks, in turn, used these additional funds to issue more real estate loans. This implies that policies that might affect household spending would lead to changes in the volume of deposits in the banking system, which have consequences on banks’ loan supply.
|Journal||Journal of Empirical Finance|
|Publication status||Published - Sep 2022|
Bibliographical notePublisher Copyright:
© 2022 Elsevier B.V.
- Bank deposits
- Bank lending
- COVID-19 pandemic