The effects of changes in local-bank health on household consumption
Daniel Cooper and
Joe Peek
No 18-5, Working Papers from Federal Reserve Bank of Boston
Abstract:
This study investigates the relationship between credit availability and household consumption using a novel approach to separate credit demand and supply. We find that a deterioration in local bank health reduces household consumption, with the strongest effects occurring for households that are more likely to need credit—especially those experiencing a negative income shock and having limited liquid assets. The main contributions of the study are the use of an arguably exogenous measure of local bank health and multifaceted indicators of constrained households. Our findings contribute to the discussion of the linkages between the financial sector and real economic activity.
Keywords: credit constraints; local-bank health; consumption (search for similar items in EconPapers)
JEL-codes: E21 G21 (search for similar items in EconPapers)
Pages: 60 pages
Date: 2018-10-01, Revised 2019-12-01
New Economics Papers: this item is included in nep-ban, nep-mac and nep-ure
Note: This is a substantially revised version of the original paper, which was posted in October 2018.
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Related works:
Journal Article: The Effects of Changes in Local Bank Health on Household Consumption (2021) 
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