Trade Uncertainty and U.S. Bank Lending

Ricardo Correa, Julian di Giovanni, Linda Goldberg and Camelia Minoiu

No 18631, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper uses U.S. credit register data and the 2018–2019 Trade War to study the effects of uncertainty on domestic credit supply. Exploiting differences in banks’ exante exposure to trade uncertainty, we find that increased uncertainty is associated with a broad lending contraction across their customer firms. This result is consistent with banks responding to uncertainty with wait-and-see behaviors, where more exposed banks curtail risky exposures, reduce loan maturities, and adjust loan supply along both intensive and extensive margins. The lending contraction is larger for more capital-constrained banks and has significant real effects, especially for bank-dependent firms.

Keywords: Trade uncertainty; Bank loans; Trade finance; Global value chains; Trade war (search for similar items in EconPapers)
JEL-codes: F34 F42 G21 (search for similar items in EconPapers)
Date: 2023-11
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Related works:
Working Paper: Trade Uncertainty and U.S. Bank Lending (2024)
Working Paper: Trade Uncertainty and U.S. Bank Lending (2023)
Working Paper: Trade Uncertainty and U.S. Bank Lending (2023)
Working Paper: Trade Uncertainty and U.S. Bank Lending (2023)
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