https://macropaperwarehouse.com/authors/paolo-gelain/Paolo GelainHugo -- gohugo.ioen-ushttps://macropaperwarehouse.com/papers/oil-price-fluctuations-us-banks-and-macroprudential-policy/https://macropaperwarehouse.com/papers/oil-price-fluctuations-us-banks-and-macroprudential-policy/<p>This paper estimates the effect of oil price fluctuations on US banking variables using a Bayesian SVAR with sign restrictions following Baumeister and Hamilton (2019). Oil market shocks that lead to a contraction in world economic activity are found to unambiguously lower the amount of bank credit to the US economy, tend to decrease US banks&rsquo; net worth, and tend to increase the US credit spread. The effects can be strong and long-lasting or more modest and short-lived, depending on the source of the oil price fluctuation. The effects are found to be stronger for smaller and lower-leveraged banks.</p>