HEC in the Press

Why the Fed is failing to boost lending

cnn.com, 5 March 2013

Since before the financial crisis began, the Federal Reserve has maintained low interest rates in order to encourage spending. Recently, however, a study co-authored by David Thesmar, Professor at HEC Paris, and published by the National Bureau of Economic Research, shows that the opposite effect has occurred. Although there have been low interest rate, bank lending is still very low. Professor Thesmar therefore recommends that the Fed increases interest rates, as the desire to borrow remains high. However, banks are too wary to loosen credit control.


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