1. Do demand or supply factors drive bank credit, in good and crisis times?
- Author
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Jiménez, Gabriel, Ongena, Steven, Peydró, José-Luis, Saurina, Jesús, and Universitat Pompeu Fabra. Departament d'Economia i Empresa
- Subjects
G28 ,firm balance-sheet channel ,leverage ,Firm balance-sheet channel ,Business cycle ,Labour, Public, Development and Health Economics ,credit demand ,business cycle ,credit crunch ,Credit crunch ,ddc:330 ,E44 ,G32 ,bank lending channel ,credit supply ,Macroeconomics and International Economics ,Finance and Accounting ,G01 ,Bank lending channel ,Credit demand ,Credit supply ,Leverage - Abstract
We analyze the impact of balance-sheet strength on credit availability. Bank balance sheets are weak in crisis times, but so are those of firms, and credit demand is then also weak. For identification, we exploit an administrative dataset of loan applications matched with bank and firm variables covering Spain from 2002 to 2010. Bank balance-sheet strength determines the granting of loan applications only in crisis times, while firm balance-sheet strength – notably leverage – determines strongly this granting in both good and crisis times. Our findings underscore the importance of the strength of corporate balance sheets over credit supply for credit availability. Ongena acknowledges financial support from the European Research Council Advanced Grant (project 740272) and Peydró acknowledges financial support from ECO2015-68182-P (MINECO/FEDER, UE) and from the European Research Council Grant (project 648398).
- Published
- 2017