Credit Supply: Identifying Balance-Sheet Channels with Loan Applications and Granted Loans

Jiménez, Gabriel; Ongena, Steven; Peydró, José-Luis; Saurina Salas, Jesus

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Credit Supply: Identifying Balance-Sheet Channels with Loan Applications and Granted Loans

CEPR Discussion Paper No. DP7655

53 Pages Posted: 8 Feb 2010

See all articles by Gabriel Jiménez

Steven Ongena

University of Zurich - Department Finance; Swiss Finance Institute; KU Leuven; NTNU Business School; Centre for Economic Policy Research (CEPR)

José-Luis Peydró

Imperial College London; Centre for Economic Policy Research (CEPR); Universitat Pompeu Fabra - Faculty of Economic and Business Sciences

Jesus Saurina Salas

Banco de España

There are 3 versions of this paper

Date Written: January 2010

Abstract

To identify credit availability we analyze the extensive and intensive margins of lending with loan applications and all loans granted in Spain. We find that both worse economic and tighter monetary conditions reduce loan granting, especially to firms or from banks with lower capital or liquidity ratios. Moreover, responding to applications for the same loan, weak banks are less likely to grant the loan. Our results suggest that firms cannot offset the resultant credit restriction by turning to other banks. Importantly the bank-lending channel is notably stronger when we account for unobserved time-varying firm heterogeneity in loan demand and quality.

Keywords: credit supply, financial accelerator, firm borrowing capacity, non-financial and financial borrower balance-sheet channels

JEL Classification: E32, E44, E5, G21, G28

Suggested Citation: Suggested Citation

Jimenez, Gabriel and Ongena, Steven R. G. and Peydro, Jose-Luis and Saurina Salas, Jesus, Credit Supply: Identifying Balance-Sheet Channels with Loan Applications and Granted Loans (January 2010). CEPR Discussion Paper No. DP7655, Available at SSRN: https://ssrn.com/abstract=1547575