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Oil price fluctuations, US banks, and macroprudential policy

Lookup NU author(s): Dr Marco Lorusso

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Abstract

Using US micro-level data on banks, we document a negative effect of high oil prices onUS banks’ balance sheets, more negative for highly leveraged banks. We set and estimate ageneral equilibrium model with banking and oil sectors that rationalizes those findings throughthe financial accelerator mechanism. This mechanism amplifies the effect of oil price shocks,making them non-negligible drivers of the dynamics of US banks’ intermediation activity andof the US real economy. Macroprudential policy, in the form of a countercyclical capital buffer,can meaningfully address oil price fluctuations and reduce the volatility they cause in the USeconomy.

Publication metadata

Author(s): Gelain P, Lorusso M

Publication type: Article

Publication status: Published

Journal: Journal of Monetary Economics

Year: 2025

Pages: epub ahead of print

Online publication date: 16/10/2025

Acceptance date: 10/10/2025

Date deposited: 05/11/2025

ISSN (print): 0304-3932

ISSN (electronic): 1873-1295

Publisher: Elsevier

URL: https://doi.org/10.1016/j.jmoneco.2025.103848

DOI: 10.1016/j.jmoneco.2025.103848

ePrints DOI: 10.57711/35ey-d106

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