Disentangling demand and supply in credit developments: a survey-based analysis for Italy

Paolo Del Giovane (), Ginette Eramo () and Andrea Nobili
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Paolo Del Giovane: Bank of Italy
Ginette Eramo: Bank of Italy

No 764, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: This paper combines qualitative information from the Eurosystem Bank Lending Survey with micro-data on loan prices and quantities for the participating Italian banks to assess the role of supply and demand factors in credit developments, with a focus on the sharp slowdown of 2008-09. Both demand and supply have played a relevant role, especially for lending to enterprises, in the whole sample period and during the financial crisis. A counterfactual exercise shows that the effect of supply factors on the growth of lending to firms was strongest after the Lehman collapse. On average, over the crisis period (2007q3-2009q4) the negative effect on the annualized quarter-on-quarter growth rate of the panel banks� lending to enterprises can be estimated in a range of 2.2 to 3.1 percentage points, depending on the specification. About one fourth of the total supply effect can be attributed to costs related to the banks� balance sheet position, the rest to their perception of credit risk.

Keywords: credit growth; supply tightening; financial crisis (search for similar items in EconPapers)
JEL-codes: E30 E32 E51 (search for similar items in EconPapers)
Date: 2010-06
New Economics Papers: this item is included in nep-ban and nep-mac
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Citations: View citations in EconPapers (24)

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Journal Article: Disentangling demand and supply in credit developments: A survey-based analysis for Italy (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:bdi:wptemi:td_764_10

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