Department of Economics and Business - Universitat Pompeu Fabra

Title:: The real effects of the bank lending channel
Authors:: Jiménez Gabriel, Atif Mian, José-Luis Peydró and Jesus Saurina
Date:: November 2014 (Revised: March 2019)
Abstract:: We study bank credit booms, exploiting the Spanish matched credit register over 2001-2009. We extend Khwaja and Mian (2008)’s loan-level estimator by incorporating firm-level general equilibrium adjustments. Higher ex-ante bank real-estate exposure increases credit supply to non-real-estate firms, but effects are neutralized by firm-level adjustments for firms with existing banking relationships. However, higher bank real-estate exposure increases risk-taking, by relaxing standards of existing borrowers (cheaper, longer-term and less collateralized credit), and by expanding credit on the extensive margin to first-time borrowers that default substantially more. Results suggest that the mechanism at work is greater liquidity via securitization of real-estate assets.
Keywords:: Bank lending channel, real effects of credit, credit supply booms, real estate, securitization.
JEL codes:: E32, E44, G01, G21, G28
Published in:: Journal of Monetary Economics 115, 2020, pp.162-179

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