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The effects of a large energy price shock on bank credit

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  • Møller, Niels Framroze
  • Pöschl, Johannes

Abstract

This study investigates the effect of the large shock to energy prices following the Russian invasion of Ukraine on bank credit to firms. To isolate the causal effect of the shock, it compares bank lending to high-energy-intensive firms to that of similar low-energy-intensive firms. Following the shock, bank credit to high-energy-intensive firms persistently declined, while their interest rates on new loans rose and other loan terms tightened. Across the distribution, safer firms reduced outstanding credit lines and paid unchanged interest rates on new bank loans, while riskier firms borrowed at higher interest rates. JEL Classification: G21, G32, Q43

Suggested Citation

  • Møller, Niels Framroze & Pöschl, Johannes, 2026. "The effects of a large energy price shock on bank credit," Working Paper Series 3260, European Central Bank.
    • Handle: RePEc:ecb:ecbwps:20263260
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    Keywords

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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