Do Credit Market Shocks affect the Real Economy? Quasi-Experimental Evidence from the Great Recession and "Normal" Economic Times

Michael Greenstone, Alexandre Mas and Hoai -Luu Nguyen
Additional contact information
Hoai -Luu Nguyen: MIT

Working Papers from Princeton University, Department of Economics, Industrial Relations Section.

Abstract: We estimate the effect of the reduction in credit supply that followed the 2008 financial crisis on the real economy. We predict county lending shocks using variation in pre-crisis bank market shares and estimated bank supply-shifts. Counties with negative predicted shocks experienced declines in small business loan originations, indicating that it is costly for these businesses to find new lenders. Using confidential microdata from the Longitudinal Business Database, we find that the 2007-2009 lending shocks accounted for statistically significant, but economically small, declines in both small firm and overall employment. Predicted lending shocks affected lending but not employment from 1997-2007.

JEL-codes: D22 D53 G01 G10 G21 J01 J23 (search for similar items in EconPapers)
Date: 2014-11
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (128)

Downloads: (external link)
https://dataspace.princeton.edu/bitstream/88435/dsp016395w932w/3/584.pdf
Our link check indicates that this URL is bad, the error code is: 500 Internal Server Error

Related works:
Journal Article: Do Credit Market Shocks Affect the Real Economy? Quasi-experimental Evidence from the Great Recession and "Normal" Economic Times (2020)
Working Paper: Do Credit Market Shocks affect the Real Economy? Quasi-Experimental Evidence from the Great Recession and ‘Normal’ Economic Times (2014)
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:pri:indrel:584

Access Statistics for this paper

More papers in Working Papers from Princeton University, Department of Economics, Industrial Relations Section. Contact information at EDIRC.
Bibliographic data for series maintained by Bobray Bordelon ().