The credit crunch and fall in employment during the Great Recession

Samuel Haltenhof, Seung Jung Lee and Viktors Stebunovs

Journal of Economic Dynamics and Control, 2014, vol. 43, issue C, 31-57

Abstract: We study how a bank credit crunch—a dramatic worsening of firm and consumer access to bank credit, such as the one observed over the Great Recession—translates into job losses in U.S. manufacturing industries. To identify the impact of the recent credit crunch, we rely on differences in the degree of dependence on external finance and of tangibility of assets across manufacturing industries and in the sensitivity of these industries׳ output to changes in the supply of consumer credit. We find that, for employment, household access to bank loans matters more than firm access to bank loans. In addition, we show that, over the recent financial crisis, tightening access to commercial and industrial loans and, in particular, consumer installment loans may have contributed significantly to the drop in employment in the manufacturing sector.

Keywords: Bank credit; Credit crunch; Job losses; Great Recession; Senior Loan Officer Opinion Survey (search for similar items in EconPapers)
JEL-codes: G21 G28 G30 J20 L25 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (39)

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Working Paper: The Credit Crunch and Fall in Employment during the Great Recession (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:43:y:2014:i:c:p:31-57

DOI: 10.1016/j.jedc.2014.03.013

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