Some borrowers are more equal than others: Bank funding shocks and credit reallocation

Olivier De Jonghe, Hans Dewachter, Klaas Mulier, Steven Ongena and Glenn Schepens

No 361, Working Paper Research from National Bank of Belgium

Abstract: This paper provides evidence on the strategic lending decisions made by banks facing a negative funding shock. Using bank-firm level credit data, we show that banks reallocate credit within their loan portfolio in at least three different ways. First, banks reallocate to sectors where they have a high market share. Second, they also reallocate to sectors in which they are more specialized. Third, they reallocate credit towards low-risk _rms. These reallocation effects are economically large. A standard deviation increase in sector market share, sector specialization or firm soundness reduces the transmission of the funding shock to credit supply by 22, 8 and 10 %, respectively.

Keywords: Credit reallocation; bank funding shock; bank credit; sector market share; sector specialization; firm risk (search for similar items in EconPapers)
JEL-codes: G01 G21 (search for similar items in EconPapers)
Pages: 65 pages
Date: 2018-12
New Economics Papers: this item is included in nep-ban
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

Downloads: (external link)
https://www.nbb.be/doc/ts/publications/wp/wp361en.pdf (application/pdf)

Related works:
Journal Article: Some Borrowers Are More Equal than Others: Bank Funding Shocks and Credit Reallocation* (2020)
Working Paper: Some Borrowers are More Equal than Others: Bank Funding Shocks and Credit Reallocation (2019)
Working Paper: Some borrowers are more equal than others: bank funding shocks and credit reallocation (2019)
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:nbb:reswpp:201810-361

Access Statistics for this paper

More papers in Working Paper Research from National Bank of Belgium Contact information at EDIRC.
Bibliographic data for series maintained by ().