Real effects of imperfect bank-firm matching

Luísa Farinha and Sotirios Kokas
Authors registered in the RePEc Author Service: Enrico Sette

Working Papers from Banco de Portugal, Economics and Research Department

Abstract: Using granular bank-firm level credit data, we show that the characteristics of bank-firm matches affect firms’ access to credit and real outcomes during crises. We identify a set of potential matches in pre-crisis years, and we use them to predict match formation in crisis times. We generate a measure of “imperfect matches" given by the difference between realized and predicted matches. In crisis times, imperfect matches deteriorate firm outcomes. The effects are economically important. A one standard deviation worsening in the index is associated with a drop in firms’ employment, tangible assets, and survival by 0.9%, 2.7%, and 4.2%, respectively.

JEL-codes: E22 E51 G21 G30 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-fdg
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