Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/158525
Authors: 
Hernando, Ignacio
Villanueva, Ernesto
Year of Publication: 
2014
Citation: 
[Journal:] SERIEs - Journal of the Spanish Economic Association [ISSN:] 1869-4195 [Volume:] 5 [Year:] 2014 [Issue:] 2/3 [Pages:] 245-285
Abstract: 
Using information from the balance sheets of Spanish banks between 1995 and 2009 matched to credit information at the bank-industry and bank-firm level, we estimate the average impact of current and anticipated changes in banks' capital on lending to firms. We isolate the role of credit supply factors using the variation in capital growth associated with the bank-specific historical exposure to real estate development and its interaction with the change in house prices in the provinces where the banks operate. We control for the quality of borrowers by using region and industry fixed effects. A 1 % increase in capital growth increases business lending to non-real estate firms by between 0.7 and 0.8 %-a limited magnitude when set against the literature. The relatively small magnitude of credit supply factors may be explained by the weakness of loan demand in a context of deep recession.
Subjects: 
Bank lending
Bank capital
Loan supply
Instrumental variables
JEL: 
E51
G21
Persistent Identifier of the first edition: 
Creative Commons License: 
http://creativecommons.org/licenses/by/2.0/
Document Type: 
Article

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