Compiled call report data for: Financial intermediation, capital accumulation and crisis recovery

We integrate bank and bond financing into a two-sector neoclassical growth
model and identify an automatic stabilization effect due to endogenous
bank leverage adjustment. We show that although bank leverage amplifies
shocks, the increase of leverage due to a decline in bank equity partially
offsets the post-crisis decline of bank lending and accelerates economic
recovery by reducing the persistence of the bank lending channel. In this
case, endogenous leverage adjustment is an automatic stabilizer.
Regulatory state-independent capital limits and wage rigidities impair the
re-allocation of capital between sectors and weaken this automatic
stabilization. A quantitative analysis of the US during the Great
Recession shows that the magnitude of automatic stabilization can be
significant and informs about potentially high costs of strict capital
regulation or wage rigidities during banking crises.