The Effect of Banking Crisis on Bank-Dependent Borrowers

Chava, Sudheer; Purnanandam, Amiyatosh

doi:10.2139/ssrn.1982118

Cited by 178 publications

(269 citation statements)

References 63 publications

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“…Note that here we are measuring a local average treatment effect for firms on the margin of having a loan approved (Imbens and Angrist, 1994). 9 This finding is not so surprising once we realize that these losses stem from firms closing down, which represent 77% of aggregate job losses in our sample. In any event, this underlines the need to examine the effect of weak-bank attachment on the probability of exit, as is done below.…”

Section: Instrumental Variables Estimatesmentioning

confidence: 75%

When Credit Dries Up: Job Losses in the Great Recession

Bentolila

Jansen

Jiménez

et al. 2017

Journal of the European Economic Association

210

160

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. We use a unique dataset to estimate the impact of a large credit supply shock on employment in Spain. We exploit marked differences in banks' health at the onset of the Great Recession. Several weak banks were rescued by the State and they reduced credit more than other banks. We compare employment changes from 2006 to 2010 at firms heavily indebted to weak banks before the crisis and the rest. Our estimates imply that these firms suffered an additional employment drop between 3 and 13.5 percentage points due to weak-bank attachment, representing between 8% and 36% of aggregate job losses. JEL-Code: D920, G330, J230. Terms of use: Documents in EconStor may

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Section: Instrumental Variables Estimatesmentioning

confidence: 75%

When Credit Dries Up: Job Losses in the Great Recession

Bentolila

Jansen

Jiménez

et al. 2017

Journal of the European Economic Association

210

160

View full text Add to dashboard Cite

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“…Amir Sufi's data is available from his personal website. 13 Looking at the LTCM-Russia crisis, Chava and Purnanandam (2009) find that affected U.S. banks raised their loan spreads. However, the authors do not identify whether these loans refer to credit lines, nor do they look at the other components of credit facilities (such as maturity or collateral).…”

Section: Comparison With Standard Datasetsmentioning

confidence: 99%

Liquidity Management and Corporate Investment During a Financial Crisis

et al. 2011

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“…As a second contribution we add to the literature on the effects of the globalization of banking for the international transmission of financial shocks Rosengren 1997, Chava andPurnanandam 2011). Relatively little research has been done on how financial crises in other countries transmit internationally to the corporate sector and the real economy (Peek and Rosengren 2000).…”

mentioning

confidence: 99%

From Financial to Real Economic Crisis: Evidence from Individual Firm-Bank Relationships in Germany

2015

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. firms. For the analysis we match individual firm and bank financial statements in Germany using information about individual lending relationships. The data include small and medium sized firms. Using IV estimations in first differences to eliminate firm-and bank-specific effects, we find that banks which experience losses from their proprietary trading activities cut back lending, and firms whose relationship banks reduce lending decrease real investment. Terms of use: Documents inBank losses from proprietary trading during the crisis caused a decrease in the net real investment rate of their business customers by 20% through the reduction of credit supply, independent from demand effects. The effect is larger for firms unable to provide much collateral. We also document that firms can partially offset reduced credit supply by their relationship banks by resorting to self-financing and by establishing new bank relationships.

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The Effect of Banking Crisis on Bank-Dependent Borrowers

Cited by 178 publications

References 63 publications

When Credit Dries Up: Job Losses in the Great Recession

When Credit Dries Up: Job Losses in the Great Recession

Liquidity Management and Corporate Investment During a Financial Crisis

From Financial to Real Economic Crisis: Evidence from Individual Firm-Bank Relationships in Germany

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