Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/208264
Authors: 
De Jonghe, Olivier
Dewachter, Hans
Mulier, Klaas
Ongena, Steven
Schepens, Glenn
Year of Publication: 
2019
Series/Report no.: 
ECB Working Paper 2230
Abstract: 
This paper provides evidence on the strategic lending decisions made by banks facing a negative funding shock. Using bank-firm level credit data, we show that banks reallocate credit within their loan portfolio in at least three different ways. First, banks reallocate to sectors where they have a high market share. Second, they also reallocate to sectors in which they are more specialized. Third, they reallocate credit towards low-risk firms. These reallocation effects are economically large. A standard deviation increase in sector market share, sector specialization or firm soundness reduces the transmission of the funding shock to credit supply by 22, 8 and 10%, respectively.
Subjects: 
Credit reallocation
bank funding shock
bank credit
sector market share
sector specialization
firm risk
JEL: 
G01
G21
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-3492-3
Document Type: 
Working Paper

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