Oil Shocks, Energy Dependence and the Corporate Credit Channel

Jaime Leyva, Roberto Panzica and Ｍichela Rancan

Working Papers from Banco de Portugal, Economics and Research Department

Abstract: This paper investigates the impact of oil shock on firms and the transmission role that the banking sector can play. In case of an oil supply news shock, as defined by Kanzig (2021), more energy-dependent firms expand their balance sheets less and decrease their investment relative to other firms. Using bank–firm level data, we show that banks play a key role as they reduce lending when they have a larger loan portfolio exposed to energy. Energy-exposed banks also adjust the terms of the loans, such as interest rate, thus contributing to exacerbate oil shock for the real sector. Our findings suggest that the effect of an oil shock is not confined to oil-dependent industries, highlighting the broader transmission channels through which oil shocks affect firms.

JEL-codes: D20 G21 Q41 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:ptu:wpaper:w202606

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