Does Credit Crunch Investment Down? New Evidence on the Real Effects of the Bank-Lending Channel

Federico Cingano, Francesco Manaresi () and Enrico Sette

The Review of Financial Studies, 2016, vol. 29, issue 10, 2737-2773

Abstract: We quantify the real effects of the bank-lending channel exploiting the dramatic liquidity drought in interbank markets that followed the 2007 financial crisis as a source of variation in credit supply. Using a large sample of matched firm–bank data from Italy, we find had the interbank market not collapsed, investment expenditure would have been more than 20% higher and would have increased by around 30 cents per additional euro of available credit at the average firm. We also find that credit shocks affect the firm's value added, employment and input purchases, and propagate through firms' trade credit chains.Received July 8, 2014; accepted April 12, 2016 by Editor Andrew Karolyi.

Date: 2016
References: Add references at CitEc
Citations: View citations in EconPapers (230)

Downloads: (external link)
http://hdl.handle.net/10.1093/rfs/hhw040 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Does credit crunch investments down? New evidence on the real effects of the bank-lending channel (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:rfinst:v:29:y:2016:i:10:p:2737-2773.

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

The Review of Financial Studies is currently edited by Itay Goldstein

More articles in The Review of Financial Studies from Society for Financial Studies Oxford University Press, Journals Department, 2001 Evans Road, Cary, NC 27513 USA.. Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press ().