The real effects of the bank lending channel

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

doi:10.1016/j.jmoneco.2019.06.002

The real effects of the bank lending channel

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

Research output: Contribution to journal › Article › peer-review

31 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 language	English (US)
Pages (from-to)	162-179
Number of pages	18
Journal	Journal of Monetary Economics
Volume	115
DOIs	https://doi.org/10.1016/j.jmoneco.2019.06.002
State	Published - 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

Access to Document

10.1016/j.jmoneco.2019.06.002

Cite this

@article{a06675cd74e94969981078ab7dc25a38,

title = "The real effects of the bank lending channel",

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.",

keywords = "Bank lending channel, Credit supply booms, Real effects of credit, Real estate, Securitization",

author = "Gabriel Jim{\'e}nez and Atif Mian and Peydr{\'o}, {Jos{\'e} Luis} and Jes{\'u}s Saurina",

note = "Funding Information: We thank several anonymous referees and Ricardo Reis for very helpful comments and suggestions. We also thank Michael Weber for excellent research assistance. We also thank seminar participants at Universitat Pompeu Fabra, University of Chicago, European Central Bank, MIT (applied), New York Federal Reserve, University of Michigan (Ross), Notre Dame, and University of California Berkeley and also Joshua Angrist, Xavier Freixas, Asim Khwaja, Daniel Paravisini, Amir Sufi and Jaume Ventura for helpful comments. Jos{\'e}-Luis Peydr{\'o} acknowledges financial support from project ECO2015-68182-P (MINECO/FEDER, UE) and the European Research Council Grant (project 648398). The results or views expressed in this study are those of the authors and do not necessarily reflect those of the Banco de Espa{\~n}a or the Eurosystem. Publisher Copyright: {\textcopyright} 2020 The Authors",

year = "2020",

month = nov,

doi = "10.1016/j.jmoneco.2019.06.002",

language = "English (US)",

volume = "115",

pages = "162--179",

journal = "Journal of Monetary Economics",

issn = "0304-3932",

publisher = "Elsevier",

}

TY - JOUR

T1 - The real effects of the bank lending channel

AU - Jiménez, Gabriel

AU - Mian, Atif

AU - Peydró, José Luis

AU - Saurina, Jesús

N1 - Funding Information: We thank several anonymous referees and Ricardo Reis for very helpful comments and suggestions. We also thank Michael Weber for excellent research assistance. We also thank seminar participants at Universitat Pompeu Fabra, University of Chicago, European Central Bank, MIT (applied), New York Federal Reserve, University of Michigan (Ross), Notre Dame, and University of California Berkeley and also Joshua Angrist, Xavier Freixas, Asim Khwaja, Daniel Paravisini, Amir Sufi and Jaume Ventura for helpful comments. José-Luis Peydró acknowledges financial support from project ECO2015-68182-P (MINECO/FEDER, UE) and the European Research Council Grant (project 648398). The results or views expressed in this study are those of the authors and do not necessarily reflect those of the Banco de España or the Eurosystem. Publisher Copyright: © 2020 The Authors

PY - 2020/11

Y1 - 2020/11

N2 - 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.

AB - 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.

KW - Bank lending channel

KW - Credit supply booms

KW - Real effects of credit

KW - Real estate

KW - Securitization

UR - http://www.scopus.com/inward/record.url?scp=85072397316&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=85072397316&partnerID=8YFLogxK

U2 - 10.1016/j.jmoneco.2019.06.002

DO - 10.1016/j.jmoneco.2019.06.002

M3 - Article

AN - SCOPUS:85072397316

SN - 0304-3932

VL - 115

SP - 162

EP - 179

JO - Journal of Monetary Economics

JF - Journal of Monetary Economics

ER -

The real effects of the bank lending channel

Abstract

All Science Journal Classification (ASJC) codes

Keywords

Access to Document

Other files and links

Fingerprint

Cite this