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Banks' funding stress, lending supply and consumption expenditure

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  • Damar, H. Evren
  • Gropp, Reint E.
  • Mordel, Adi

Abstract

We employ a unique identification strategy linking survey data on household consumption expenditure to bank-level data to estimate the effects of bank funding stress on consumer credit and consumption expenditures. We show that households whose banks were more exposed to funding shocks report lower levels of nonmortgage liabilities. This, however, only translates into lower levels of consumption for low income households. Hence, adverse credit supply shocks are associated with significant heterogeneous effects.

Suggested Citation

  • Damar, H. Evren & Gropp, Reint E. & Mordel, Adi, 2019. "Banks' funding stress, lending supply and consumption expenditure," IWH Discussion Papers 11/2019, Halle Institute for Economic Research (IWH).
    • Handle: RePEc:zbw:iwhdps:112019
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    Cited by:

    1. Damar, H. Evren & Lange, Ian & McKennie, Caitlin & Moro, Mirko, 2020. "Banking deregulation and household consumption of durables," IWH Discussion Papers 18/2020, Halle Institute for Economic Research (IWH).
    2. Evren Damar & Ian Lange & Caitlin McKennie & Mirko Moro, 2024. "Banking deregulation and consumption of home durables," Climatic Change, Springer, vol. 177(3), pages 1-20, March.
    3. H. Evren Damar & Reint Gropp & Adi Mordel, 2019. "Flight from Safety: How a Change to the Deposit Insurance Limit Affects Households’ Portfolio Allocation," Staff Working Papers 19-29, Bank of Canada.

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    More about this item

    Keywords

    credit supply; banking; financial crisis; consumption expenditure; liquid assets; consumption smoothing;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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