The banks that said no: the impact of credit supply on productivity and wages

Jeremy Franklin, May Rostom and Gregory Thwaites

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This paper estimates the effects of changes in bank credit supply on the real economy. We use UK firm-level data around the global financial crisis and information on pre-existing bank lending relationships to isolate exogenous credit supply shocks. We find some evidence that contractions in credit supply substantially reduce labour productivity, wages, and capital per worker within firms, and increase the chance firms will fail. Our results have implications for the welfare costs of financial crises, and for the costs of policy measures affecting credit supply at other times.

Keywords: banks; credit supply; firm behaviour; productivity (search for similar items in EconPapers)
JEL-codes: D24 G21 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2019-04-03
New Economics Papers: this item is included in nep-ban and nep-eff
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Citations: View citations in EconPapers (1)

Published in Journal of Financial Services Research, 3, April, 2019, 57(2), pp. 149 - 179. ISSN: 0920-8550

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http://eprints.lse.ac.uk/100543/ Open access version. (application/pdf)

Related works:
Journal Article: The Banks that Said No: the Impact of Credit Supply on Productivity and Wages (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:100543

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