Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/229609
Authors: 
Grimme, Christian
Henzel, Steffen
Year of Publication: 
2020
Series/Report no.: 
CESifo Working Paper No. 8791
Abstract: 
We demonstrate that the impact of increases in uncertainty on bank credit conditions depends on the level of uncertainty. Using firm-level survey data, we document that a surge in business-specific uncertainty is particularly damaging when this uncertainty is low: low levels nearly triple the effect compared to high levels. The result is robust to controlling for recessionary periods. To provide an interpretation, we build and calibrate a stylized model in which bank lending is governed by expectations about the future level of business uncertainty. Increases in uncertainty serve as a signal to update these expectations. The model predicts that expectations are revised more strongly and, thus, lending drops more under low uncertainty.
Subjects: 
uncertainty
financial frictions
bank lending
survey data
JEL: 
C23
E32
G21
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.