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Corporate Finance when Monetary Policy Tightens: How do Banks and Non-Banks Affect Access to Credit?

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Author Info
Mizen, Paul () (University of Nottingham)
Yalcin, Cihan (University of Nottingham)

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Abstract

The evolving financial environment facing the corporate sector provides many non-bank external finance options as an alternative to bank finance and this paper examines the relationship between UK firms' choices over bank versus non-bank finance under different monetary conditions. We look at the external finance 'mix' using a panel of 16,000 UK firm records taken from the FAME database for the years 1990 through 1999 taking into account firm-specific characteristics. The paper provides support for a credit channel by demonstrating evidence consistent with a bank lending channel, accelerator effects and a broad credit channel for small, risky and young firms that shows all types of lending are reduced for these groups when monetary policy tightens.

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Paper provided by United Nations University, Institute for New Technologies in its series EIFC - Technology and Finance Working Papers with number 18.

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Date of creation: 2003
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Handle: RePEc:dgr:unutaf:eifc03-18

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Keywords: enterprises; financing; United Kingdom; banking;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. A. Prasad & Saibal Ghosh, 2005. "Monetary Policy and Corporate Behaviour in India," IMF Working Papers 05/25, International Monetary Fund. [Downloadable!]
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