IDEAS home Printed from https://ideas.repec.org/a/oup/rcorpf/v12y2023i2p326-365..html
   My bibliography  Save this article

Credit Environment and Small Business Dynamics: Evidence from Establishment-Level Data

Author

Listed:
  • Chen Lin
  • Mingzhu Tai
  • Wensi Xie

Abstract

We evaluate how a positive, technology-driven shock to bank liquidity affects small business dynamics across different size distributions. We first show that banks receiving positive liquidity shocks increase lending to relatively larger SMEs, not to the smallest firms. This finding is consistent with the view that a positive liquidity shock enhances bank charter values, thereby reducing risk-taking incentives. Moreover, such disproportionate credit allocation leads to a crowding-out effect on micro firms. When larger SMEs grow faster and exit less because of better access to credit, their expansion stifles the development of micro firms, whose access to credit remains unchanged. (JEL G21, J21, L22)

Suggested Citation

  • Chen Lin & Mingzhu Tai & Wensi Xie, 2023. "Credit Environment and Small Business Dynamics: Evidence from Establishment-Level Data," The Review of Corporate Finance Studies, Society for Financial Studies, vol. 12(2), pages 326-365.
    • Handle: RePEc:oup:rcorpf:v:12:y:2023:i:2:p:326-365.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/rcfs/cfac037
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:rcorpf:v:12:y:2023:i:2:p:326-365.. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://academic.oup.com/rcfs .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.