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Credit supply: identifying balance-sheet channels with loan applications and granted loans

Author

Listed:
  • Gabriel Jiménez

    (Banco de España)

  • Steven Ongena

    (Center–Tilburg University and CEPR)

  • José-Luis Peydró

    (European Central Bank)

  • Jesús Saurina

    (Banco de España)

Abstract

To identify credit availability we analyze the extensive and intensive margins of lending with loan applications and all loans granted in Spain. We find that during the period analyzed both worse economic and tighter monetary conditions reduce loan granting, especially to firms or from banks with lower capital or liquidity ratios. Moreover, responding to applications for the same loan, weak banks are less likely to grant the loan. Our results suggest that firms cannot offset the resultant credit restriction by turning to other banks. Importantly the bank-lending channel is notably stronger when we account for unobserved time-varying firm heterogeneity in loan demand and quality.

Suggested Citation

  • Gabriel Jiménez & Steven Ongena & José-Luis Peydró & Jesús Saurina, 2010. "Credit supply: identifying balance-sheet channels with loan applications and granted loans," Working Papers 1030, Banco de España.
  • Handle: RePEc:bde:wpaper:1030
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    More about this item

    Keywords

    non-financial and financial borrower balance-sheet channels; financial accelerator; firm borrowing capacity; credit supply; business cycle; monetary policy; credit channel; net worth; capital; liquidity; 2007-09 crisis;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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