The Decline of Big-Bank Lending to Small Business: Dynamic Impacts on Local Credit and Labor Markets

Brian S. Chen, Samuel Hanson and Jeremy Stein

No 23843, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Small business lending by the four largest banks fell sharply relative to others in 2008 and remained depressed through 2014. We explore the dynamic adjustment process following this credit supply shock. In counties where the largest banks had a high market share, the aggregate flow of small business credit fell, interest rates rose, fewer businesses expanded, unemployment rose, and wages fell from 2006 to 2010. While the flow of credit recovered after 2010 as other lenders slowly filled the void, interest rates remain elevated. Although unemployment returns to normal by 2014, the effect on wages persists in these areas.

JEL-codes: G01 G21 G23 (search for similar items in EconPapers)
Date: 2017-09
New Economics Papers: this item is included in nep-ban
Note: CF
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (71)

Downloads: (external link)
http://www.nber.org/papers/w23843.pdf (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:nbr:nberwo:23843

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w23843

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().