The real effects of the bank lending channel

Gabriel Jimenez, Atif Mian, Jose-Luis Peydro and Jesús Saurina

Journal of Monetary Economics, 2020, vol. 115, issue C, 162-179

Abstract: This paper studies credit booms exploiting the Spanish matched credit register over 2001–2009. We extend Khwaja and Mian’s (2008) loan-level estimator by incorporating firm-level general equilibrium adjustments. Higher ex-ante bank real-estate exposure increases credit supply to non-real-estate firms, but effects are neutralized by firm-level adjustments for firms with existing banking relationships. However, higher bank real-estate exposure increases risk-taking, by relaxing standards of existing borrowers (cheaper, longer-term and less collateralized credit), and by expanding credit on the extensive margin to first-time borrowers that default substantially more. Results suggest that the mechanism at work is greater liquidity via securitization of real-estate assets.

Keywords: Bank lending channel; Real effects of credit; Credit supply booms; Real estate; Securitization (search for similar items in EconPapers)
JEL-codes: E32 E44 G01 G21 G28 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (45)

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Working Paper: The Real Effects of the Bank Lending Channel (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:115:y:2020:i:c:p:162-179

DOI: 10.1016/j.jmoneco.2019.06.002

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