The real effects of the bank lending channel

Gabriel Jiménez, Atif Mian, José Luis Peydró, Jesús Saurina

Research output: Contribution to journalArticlepeer-review

1 Scopus citations

Abstract

This paper studies credit booms exploiting the Spanish matched credit register over 2001–2009. We extend Khwaja and Mian's (2008) loan-level estimator by incorporating firm-level general equilibrium adjustments. Higher ex-ante bank real-estate exposure increases credit supply to non-real-estate firms, but effects are neutralized by firm-level adjustments for firms with existing banking relationships. However, higher bank real-estate exposure increases risk-taking, by relaxing standards of existing borrowers (cheaper, longer-term and less collateralized credit), and by expanding credit on the extensive margin to first-time borrowers that default substantially more. Results suggest that the mechanism at work is greater liquidity via securitization of real-estate assets.

Original languageEnglish (US)
Pages (from-to)162-179
Number of pages18
JournalJournal of Monetary Economics
Volume115
DOIs
StatePublished - Nov 2020

All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics

Keywords

  • Bank lending channel
  • Credit supply booms
  • Real effects of credit
  • Real estate
  • Securitization

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