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Estimating the Impact of Loan Supply Shocks

Author

Listed:
  • Bergman, Nittai
  • Casado, Alejandro
  • Iyer, Rajkamal
  • Saporta-Eksten, Itay

Abstract

Using a simple model of firm borrowing with standard ingredients, we show that commonly used empirical approaches in the literature do not recover the impact of credit supply shocks on loan-level lending, on total firm-level borrowing or on real outcomes. We propose new estimators that recover these effects. We apply our methodology to the 2011 credit crisis in Spain and show that it implies significantly smaller effects of loan supply shocks than those generated by current empirical approaches.

Suggested Citation

  • Bergman, Nittai & Casado, Alejandro & Iyer, Rajkamal & Saporta-Eksten, Itay, 2025. "Estimating the Impact of Loan Supply Shocks," CEPR Discussion Papers 20865, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:20865
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    File URL: https://cepr.org/publications/DP20865
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    Keywords

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    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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