Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/216802 
Year of Publication: 
2017
Series/Report no.: 
Economic Working Paper Series No. 1567
Publisher: 
Universitat Pompeu Fabra (upf), Department of Economics and Business, Barcelona
Abstract: 
We analyze the impact of balance-sheet strength on credit availability. Bank balance sheets are weak in crisis times, but so are those of firms, and credit demand is then also weak. For identification, we exploit an administrative dataset of loan applications matched with bank and firm variables covering Spain from 2002 to 2010. Bank balance-sheet strength determines the granting of loan applications only in crisis times, while firm balance-sheet strength – notably leverage – determines strongly this granting in both good and crisis times. Our findings underscore the importance of the strength of corporate balance sheets over credit supply for credit availability.
Subjects: 
firm balance-sheet channel
credit demand
bank lending channel
credit supply
business cycle
credit crunch
leverage
JEL: 
E44
G01
G28
G32
Document Type: 
Working Paper

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