Understanding differential effects across markets or jurisdictions delivers valuable lessons for policy development that would be missed by looking only at averages. Take, for example, the increase in capital requirements for banks after the crisis. Higher capital requirements increase the resilience of banks with regard to shocks and provide the basis for sustainable lending to the real economy.
Trends in post-crisis bank lending have differed across countries and individual banks. A decline in lending can, for instance, be due to a decline in credit demand, more prudent lending behavior of banks in response to higher risks, or it can result from a decline in banks’ credit supply.