Capital Flows, Real Estate, and Local Cycles: Evidence from German Cities, Banks, and Firms

Peter Bednarek (), Daniel te Kaat, Chang Ma and Alessandro Rebucci ()

No 26820, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study how an aggregate bank flow shock impacts German cities' GDP growth depending on the state of their local real estate markets. Identification exploits a policy framework assigning refugees to cities on a quasi-random basis and variation in non-developable area for the construction of a measure of exposure to local real estate market tightness. We estimate that the German cities most exposed to real estate market pressure grew 2.5-5.0 percentage points more than the least exposed ones, cumulatively, during the 2009-2014 period. Bank flow shocks shift credit to firms with more collateral. More collateral also leads firms to hire and invest more in response to these shocks.

JEL-codes: D22 D53 E22 E3 E44 F3 G01 G15 G21 R3 (search for similar items in EconPapers)
Date: 2020-03
New Economics Papers: this item is included in nep-ban, nep-cfn, nep-mac and nep-ure
Note: CF EFG IFM ME PE
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Citations: View citations in EconPapers (7)

Published as Peter Bednarek & Daniel Marcel te Kaat & Chang Ma & Alessandro Rebucci & Philip Strahan, 2021. "Capital Flows, Real Estate, and Local Cycles: Evidence from German Cities, Banks, and Firms," The Review of Financial Studies, vol 34(10), pages 5077-5134.

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Related works:
Journal Article: Capital Flows, Real Estate, and Local Cycles:Evidence from German Cities, Banks, and Firms (2021)
Working Paper: Capital Flows, Real Estate, and Local Cycles: Evidence from German Cities, Banks, and Firms (2019)
Working Paper: Capital flows, real estate, and local cycles: Evidence from German cities, banks, and firms (2019)
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