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Corporate investment and bank-dependent borrowers during the recent financial crisis

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  • Vermeulen, Philip
  • Buca, Andra

Abstract

We use the recent financial crisis period to analyse the effect of bank credit tightening on real firm investment. We derive a new set of credit tightening indexes from the ECB Bank Lending Survey. Combining these with annual balance sheet data from Germany, France, Italy, Spain, Belgium and Portugal, we exploit the heterogeneity in the dependence on bank finance of different industries to identify real effects of credit tightening. We show that in response to tightening, investment falls substantially more in bank-dependent industries. JEL Classification: E22, E44, G01

Suggested Citation

  • Vermeulen, Philip & Buca, Andra, 2015. "Corporate investment and bank-dependent borrowers during the recent financial crisis," Working Paper Series 1859, European Central Bank.
    • Handle: RePEc:ecb:ecbwps:20151859
    Note: 327651
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    More about this item

    Keywords

    corporate investment; credit crunch; financial crisis;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G01 - Financial Economics - - General - - - Financial Crises

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