 Bank loan supply shocks and alternative financing of non‐financial corporations in the euro areaMartin Mandler and Michael Scharnagl Manchester School, 2020, vol. 88, issue S1, 126-150 Abstract: We analyse the macroeconomic effects of exogenous contractions in bank lending to non‐financial corporations in the euro area, Germany, France, Italy and Spain using a BVAR model with endogenous hyperparameter selection and identification via sign restrictions. We investigate the behaviour of firms’ external financing sources alternative to bank loans: financing via equity, debt securities, trade credit and lending from non‐banks. We analyse the comovement of these financing sources with bank lending using the joint posterior distribution of their impulse responses with that of bank loans. For the euro area our results show equity, debt securities and non‐bank loans to be substitutes for bank loans in general equilibrium with negative responses to a positive loan supply shock while trade credit is a complement and responds positively. Quantitatively, the developments in bank loans and trade credit dominate the response of the overall sum of external financing. However, whether and which of the alternative financing sources are substitutes for or complements to bank loans in general equilibrium differs across countries. Date: 2020 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:manchs:v:88:y:2020:i:s1:p:126-150 Ordering information: This journal article can be ordered from Access Statistics for this article Manchester School is currently edited by Keith Blackburn More articles in Manchester School from University of Manchester Contact information at EDIRC. |
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