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The Consumption Effects of the 2007-2008 Financial Crisis: Evidence from Household-level Data

Author

Listed:
  • Thais Lærkholm Jensen
  • Niels Johannesen

Abstract

Did the financial crisis spread from distressed banks to households through a contraction of the credit supply? We study this question with a dataset that contains observations on all accounts in Danish banks as well as comprehensive information about individual account holders and banks. We show that banks exposed to the financial crisis reduced their credit supply significantly and that their customers reduced both borrowing and consumption relative to customers in non-exposed banks. The credit supply channel can explain roughly one third of the decrease in aggregate private consumption observed in Denmark between 2007 and 2009.

Suggested Citation

  • Thais Lærkholm Jensen & Niels Johannesen, 2015. "The Consumption Effects of the 2007-2008 Financial Crisis: Evidence from Household-level Data," CESifo Working Paper Series 5600, CESifo.
    • Handle: RePEc:ces:ceswps:_5600
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    File URL: https://www.cesifo.org/DocDL/cesifo1_wp5600.pdf
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    Citations

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    Cited by:

    1. Dwenger, Nadja & Fossen, Frank & Simmler, Martin, 2015. "From financial to real economic crisis. Evidence from individual firm-bank relationships in Germany," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113000, Verein für Socialpolitik / German Economic Association.
    2. Nadja Dwenger & Frank M Fossen & Martin Simmler, 2015. "From financial to real economic crisis: evidence from individual firm¨Cbank relationships in Germany," Working Papers 1516, Oxford University Centre for Business Taxation.
    3. Eunice Tamoh Anu, 2016. "Investigating the Effectiveness of Mortgage Demand and the Significant Level of the Changes: Evidence from the Intervention of the Financial Crisis," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 6(4), pages 136-154, April.
    4. Hanspal, Tobin, 2016. "The effect of personal financing disruptions on entrepreneurship," SAFE Working Paper Series 161, Leibniz Institute for Financial Research SAFE.

    More about this item

    Keywords

    relationship banking; financial crisis; household consumption; household credit;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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