EconPapers    
Economics at your fingertips  
 

The Impact of Bank Lending Standards on Credit to Firms

Lorenzo Ricci, Giovanni Soggia and Lorenzo Trimarchi ()

No 2022-01, Working Papers ECARES from ULB -- Universite Libre de Bruxelles

Abstract: This paper investigates the impact of idiosyncratic shocks in bank lending standards on firm credit in Italy, using survey data from the Regional Bank Lending Survey to identify bank supply conditions. From 2009 to 2019, we document that a one-standard-deviation tightening in lending standards reduces firm credit growth by 0.21 percentage points and explains 4.3% of the total variation. This effect is driven mainly by liquidity provisionsto firms for credit lines. Examining the extensive margin of the bank-firm relationship, we find that a negative shock significantly impacts the probability of accepting new loan applications and the likelihood of the bank-firm relationship breaking up. We also show firms cannot smooth individual bank shocks by borrowing more from other lenders. Changes to lending standards have sizable and persistent effects on aggregatecredit and production, especially at times of high economic uncertainty.

Keywords: Credit Growth; Bank Lending Standards; Credit Lines (search for similar items in EconPapers)
Pages: 41 p.
Date: 2022-01
New Economics Papers: this item is included in nep-ban, nep-cfn, nep-cwa and nep-fdg
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Published by:

Downloads: (external link)
https://dipot.ulb.ac.be/dspace/bitstream/2013/3380 ... ARCHI-the-impact.pdf Œuvre complète ou partie de l'œuvre (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:eca:wpaper:2013/338083

Ordering information: This working paper can be ordered from
http://hdl.handle.ne ... lb.ac.be:2013/338083

Access Statistics for this paper

More papers in Working Papers ECARES from ULB -- Universite Libre de Bruxelles Contact information at EDIRC.
Bibliographic data for series maintained by Benoit Pauwels ().

 
Page updated 2022-06-22
Handle: RePEc:eca:wpaper:2013/338083