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Fragile Financing? How Corporate Reliance on Shadow Banking Affects their Access to Bank Liquidity

Author

Listed:
  • Acharya, Viral
  • Gopal, Manasa
  • Steffen, Sascha

Abstract

Greater reliance on nonbank financing makes firms fragile as it leads banks to limit their access to credit lines. Besides demonstrating this result in panel tests subject to range of controls and robustness checks, we employ the 2014–16 oil-price collapse as an exogenous rollover risk in nonbank financing of non-oil-sector firms by collateralized loan obligations (CLOs) exposed to oil sector firms. Nonbank-reliant firms with looming maturities faced reductions and wider spreads in bank credit lines after the shock, resulting in weaker financial and real performance in spite of their drawdowns of existing credit lines.

Suggested Citation

  • Acharya, Viral & Gopal, Manasa & Steffen, Sascha, 2025. "Fragile Financing? How Corporate Reliance on Shadow Banking Affects their Access to Bank Liquidity," CEPR Discussion Papers 20179, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:20179
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    File URL: https://cepr.org/publications/DP20179
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    More about this item

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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