Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/154120
Authors: 
Damar, H. Evren
Gropp, Reint
Mordel, Adi
Year of Publication: 
2014
Series/Report no.: 
ECB Working Paper 1687
Abstract: 
We employ a unique identification strategy linking survey data on household consumption expenditure to bank-level data to estimate the effects of bank financial distress on consumer credit and consumption expenditures. We show that households whose banks were more exposed to funding shocks report lower levels of non-mortgage liabilities. This, however, does not result in lower levels of consumption. Households compensate by drawing down liquid assets to smooth consumption in the face of a temporary adverse lending supply shock. The results contrast with recent evidence on the real effects of finance on firms' investment and employment decisions.
Subjects: 
Banking
consumption expenditure
consumption smoothing
Credit Supply
financial crisis
liquid assets
JEL: 
E21
E44
G21
G01
Document Type: 
Working Paper

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