Tracing the Impact of Bank Shocks under Bank-Specific Credit Demand

Max Bruche, Farinha, Luísa, Sotirios Kokas, Enrico Sette and Serafeim Tsoukas

No 21335, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We propose a method for estimating the effect of bank shocks on credit supply when firms have heterogeneous preferences over banks. We model firms’ bank choices in a discrete-choice setting and show that firms prefer banks that are geographically closer, specialized in their industry, and better capitalized. The model yields a predicted probability that a firm borrows from a given bank, capturing firm-specific preferences that can be controlled for in standard credit supply regressions `a la Khwaja and Mian (2008). Accounting for these preferences changes the estimated transmission of shocks through banks, revealing a potential bias in the conventional identification strategy.

Keywords: Relationship; lending (search for similar items in EconPapers)
JEL-codes: E22 E51 G21 G30 (search for similar items in EconPapers)
Date: 2026-03
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP21335 (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:21335

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP21335

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 ().