Corporate Runs and Credit Reallocation

Elena Carletti, Filippo De Marco, Vasso Ioannidou and Enrico Sette

No 20363, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We study the reaction of corporate clients to bank distress on both sides of banks’ balance sheet, exploiting the 2017 failure of two Italian regional banks. We find that firms initiate deposit runs before households, as soon as the banks’ distress becomes public. At the same time, an endogenous deterioration unfolds on the asset side: while risky firms draw down existing credit lines from distressed banks, creditworthy firms seek new lending relationships with healthier banks. Only the riskier firms reduce investment, as creditworthy firms successfully switch to other banks, which in turn reallocate credit away from riskier firms.

JEL-codes: G21 G28 (search for similar items in EconPapers)
Date: 2025-06
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP20363 (application/pdf)

Related works:
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:cpr:ceprdp:20363

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP20363

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().