Cournot seminar – Michael Brei (U. Lille)
The 2026/06/05
From 2:00pm to 3:30pm
Event details :
We are pleased to welcome to the next session of the BETA Cournot seminar organised with the support of the FSEG on Friday 05/06, at 02:00pm:
Michael Brei (U. Lille)
who will present his paper entitled
Reserve requirements, excess liquidity and bank lending: Evidence from the Caribbean and Central America
Abstract: This paper investigates the impact of two major central bank policy instruments, namely adjustments in reserve requirements and policy rates, on individual banks operating in Central America and the Caribbean. Using information on 116 banks from 20 jurisdictions, we find that banks in the two regions respond to tighter reserve requirements by increasing their holdings of cash and eligible reserve assets. Importantly, there is a concomitant slowdown in lending one year after the central banks’ policy tightening. Policy rate changes, however, show limited impact on bank reserves and credit intermediation. From this perspective, adjustments in reserve requirements represent an effective countercyclical policy tool in mitigating credit cycles, even in banking systems with excess liquidity. For the small island economies, the results should be interpreted with caution, as tighter reserve requirements are associated with heightened credit risks one year after the policy tightening, potentially reflecting increased risk-taking by banks in pursuit of higher yields.
If you would like to meet Michael Brei, please contact Thierry Betti.
