TY - JOUR
T1 - Do credit market shocks affect the real economy? Quasi-experimental evidence from the great recession and "normal" economic times
AU - Greenstone, Michael
AU - Mas, Alexandre
AU - Nguyen, Hoai Luu
N1 - Funding Information:
* Greenstone: Department of Economics, University of Chicago, 1126 E. 59th Street, Chicago, IL 60637 (email: mgreenst@uchicago.edu); Mas: Industrial Relations Section, Simpson International Building, Princeton University, Princeton, NJ 08544 (email: amas@princeton.edu); Nguyen: Haas School of Business, UC Berkeley, 545 Student Services Building, Berkeley, CA 94720 (email: hqn@berkeley.edu). Matthew Shapiro was editor for this article. We are grateful to Laurien Gilbert, Felipe Goncalves, Ernest Liu, Steven Mello, and Harshil Sahai for excellent research assistance. We thank Daron Acemoglu, Pat Kline, Lawrence Summers, Adi Sunderam, Ivan Werning, and seminar participants at the NBER Summer Institute, Columbia, Brookings, Boston Federal Reserve, Bank of Mexico, and the AEA Meeting in Boston for helpful comments. We also thank Abigail Cooke, Javier Miranda, Emin Dinlersoz, Jorgen Harris, and Lars Vilhuber for assistance through the Synthetic LBD project. Information about the Synthetic LBD, including how to access it, can be found at https://www.census.gov/ces/dataproducts/synlbd/index.html. The Synthetic LBD was accessed through the Cornell Synthetic Data Server https://www2.vrdc.cornell.edu/news/ synthetic-data-server, which received funding through NSF grant SES-1042181 and BCS-0941226, and through a grant from the Alfred P. Sloan Foundation. All results have been reviewed to ensure that no confidential information is disclosed, and released under DRB Bypass Number DRB-B0100-CDAR-20180626. Any opinions and conclusions expressed herein are those of the authors and do not necessarily represent the views of the US Census Bureau. †Go to https://doi.org/10.1257/pol.20160005 to visit the article page for additional materials and author disclosure statement(s) or to comment in the online discussion forum.
Publisher Copyright:
© 2019 American Economic Association.
PY - 2020/2/1
Y1 - 2020/2/1
N2 - Using comprehensive data on bank lending and establishment-level outcomes from 1997-2010, this paper finds that small business lending is an unimportant determinant of small business and overall economic activity. A shift-share style research design is implemented to predict county-level lending shocks using variation in preexisting bank market shares and bank supply shifts. Counties with negative predicted lending shocks experienced declines in small business loan originations, indicating that it is costly to switch lenders. However, small business loan originations have an economically insignificant and generally statistically insignificant impact on both small firm and overall employment during the Great Recession and normal times. (JEL E32, E44, E52, G21, G32, L25).
AB - Using comprehensive data on bank lending and establishment-level outcomes from 1997-2010, this paper finds that small business lending is an unimportant determinant of small business and overall economic activity. A shift-share style research design is implemented to predict county-level lending shocks using variation in preexisting bank market shares and bank supply shifts. Counties with negative predicted lending shocks experienced declines in small business loan originations, indicating that it is costly to switch lenders. However, small business loan originations have an economically insignificant and generally statistically insignificant impact on both small firm and overall employment during the Great Recession and normal times. (JEL E32, E44, E52, G21, G32, L25).
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U2 - 10.1257/pol.20160005
DO - 10.1257/pol.20160005
M3 - Article
AN - SCOPUS:85106851109
SN - 1945-7731
VL - 12
SP - 200
EP - 225
JO - American Economic Journal: Economic Policy
JF - American Economic Journal: Economic Policy
IS - 1
ER -