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Estimating the effects of a credit supply restriction: is there a bias in the Bank Lending Survey?

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  • Andrea Nobili

    () (Bank of Italy)

  • Andrea Orame

    () (Bank of Italy)

Abstract

In this paper we test for the potential bias in the estimated contribution of a supply restriction on lending to enterprises, as captured by the assessment of credit standards provided by the banks participating in the Eurosystem Bank Lending Survey (BLS banks). For Italy, we combine the information provided by the relatively small panel of large banking groups participating in the Eurosystem survey with the replies obtained from the non-overlapping and wider group of banks participating in the Regional Bank Lending Survey (non-BLS banks) carried out by the Bank of Italy. We find evidence of a limited upward bias in the estimated contribution of a tightening in credit standards from using the information for the BLS-only banks. This outcome mainly reflects a lower estimated sensitivity of lending growth to the considered indicators of a supply restriction for the non-BLS banks. The Eurosystem Bank Lending Survey, therefore, continues to be a timely and important source of information over the credit cycle for policymakers.

Suggested Citation

  • Andrea Nobili & Andrea Orame, 2015. "Estimating the effects of a credit supply restriction: is there a bias in the Bank Lending Survey?," Questioni di Economia e Finanza (Occasional Papers) 266, Bank of Italy, Economic Research and International Relations Area.
  • Handle: RePEc:bdi:opques:qef_266_15
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    File URL: http://www.bancaditalia.it/pubblicazioni/qef/2015-0266/QEF_266.pdf
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    More about this item

    Keywords

    supply of credit; banks; Eurosystem BLS; Regional Bank Lending Survey;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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