Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/311139 
Year of Publication: 
2024
Series/Report no.: 
ECB Working Paper No. 2975
Publisher: 
European Central Bank (ECB), Frankfurt a. M.
Abstract: 
Using a novel dataset linking firm level data from the Survey on Access to Finance of Enterprises (SAFE) and bank level data from the Bank Lending Survey (BLS), we explore how changes in credit standards pass through to firms at a granular level. We find that tighter credit standards decrease loan availability reported by firms, increase the likelihood they report access to finance as the worst problem and decrease their investment. After controlling for country-sector-time fixed effects that capture cyclical macroeconomic conditions, effects only remain for firms that need finance. Moreover, we find that a more diversified funding base insulates firms from the negative impacts of tighter credit standards on availability of bank loans and access to finance, although there is little evidence of such an effect for investment. Effects are asymmetric, with stronger impacts recorded for a tightening than an easing. Our results underscore the importance of demand conditions when interpreting the credit conditions and we thus propose a new indicator of demand adjusted credit standards at a euro area level, which can be used to analyse broader credit dynamics.
Subjects: 
Finance
credit conditions
surveys
firm-bank relationships
JEL: 
D22
E22
E52
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-6834-8
Document Type: 
Working Paper

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