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Shocked by Bank Funding Shocks: Evidence from Consumer Credit Cards.

Authors :
Chava, Sudheer
Ganduri, Rohan
Paradkar, Nikhil
Zeng, Linghang
Source :
Review of Financial Studies; Oct2023, Vol. 36 Issue 10, p3906-3952, 47p
Publication Year :
2023

Abstract

Using the near universe of U.S. consumer credit cards, we show that banks transmit their wholesale funding shocks to consumers by reducing their credit card limits. Credit-constrained consumers who are unable to hedge against the transmitted shock by accessing other credit cards experience a stronger and more persistent reduction in aggregate credit card limits at the consumer level. Consequently, these credit-constrained consumers reduce their aggregate credit card borrowing. Our results document a credit card lending channel for the transmission of adverse bank shocks and show who bears the costs of fragile bank funding structures. Authors have furnished an Internet Appendix , which is available on the Oxford University Press Web site next to the link to the final published paper online. [ABSTRACT FROM AUTHOR]

Details

Language :
English
ISSN :
08939454
Volume :
36
Issue :
10
Database :
Complementary Index
Journal :
Review of Financial Studies
Publication Type :
Academic Journal
Accession number :
172041794
Full Text :
https://doi.org/10.1093/rfs/hhad039