Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/318146 
Year of Publication: 
2017
Series/Report no.: 
BCAM Working Paper No. 1703
Publisher: 
Birkbeck, University of London, Birkbeck Centre for Applied Macroeconomics (BCAM), London
Abstract: 
We study the impact of economic uncertainty on the supply of bank credit using a monthly dataset that includes all loan applications submitted by a sample of 650,000 Italian firms between 2003 and 2012. We find that an increase in aggregate uncertainty has three effects. First, it reduces banks' likelihood to accept new credit applications. Second, it lengthens the time firms have to wait for their loans to be released. Third, it makes banks less responsive to fluctuations in short-term interest rates, weakening the bank lending channel of monetary policy. The influence of uncertainty is relatively stronger for poorly capitalized lenders and geographically distant borrowers.
Subjects: 
uncertainty
credit supply
bank lending channel
loan applications
JEL: 
E51
G21
Document Type: 
Working Paper

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