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Bank lending in uncertain times

Piergiorgio Alessandri and Margherita Bottero

European Economic Review, 2020, vol. 128, issue C

Abstract: We study the impact of economic uncertainty on credit supply using monthly data on more than two million corporate loan applications received by Italian banks between 2004 and 2012. We find that an increase in aggregate uncertainty has two effects: it lowers the likelihood that firms’ applications will be successful, and it prolongs the time firms have to wait for their loans to be disbursed. This financial acceleration mechanism varies in the cross section, affecting mainly banks with low capital buffers and firms that are geographically distant from the bank to which they apply.

Keywords: uncertainty; credit supply; loan applications (search for similar items in EconPapers)
JEL-codes: E51 G21 (search for similar items in EconPapers)
Date: 2020
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Working Paper: Bank lending in uncertain times (2017) Downloads
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DOI: 10.1016/j.euroecorev.2020.103503

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European Economic Review is currently edited by T.S. Eicher, A. Imrohoroglu, E. Leeper, J. Oechssler and M. Pesendorfer

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