Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/88741
Authors: 
Damar, H. Evren
Gropp, Reint
Mordel, Adi
Year of Publication: 
2013
Series/Report no.: 
SAFE Working Paper Series 39
Abstract: 
The paper employs a unique identification strategy that links survey data on household consumption expenditure to bank level data in order to estimate the effects of bank financial distress on consumer credit and consumption expenditures. Specifically, we show that households whose banks were more exposed to funding shocks report significantly lower levels of non-mortgage liabilities compared to a matched sample of households. The reduced access to credit, however, does not result in lower levels of consumption. Instead, we show that households compensate by drawing down liquid assets. Only households without the ability to draw on liquid assets reduce consumption. The results are consistent with consumption smoothing in the face of a temporary adverse lending supply shock. The results contrast with recent evidence on the real effects of finance on firms' investment, where even temporary adverse credit supply shocks are associated with significant real effects.
Subjects: 
credit supply
banking
financial crisis
consumption expenditure
liquid assets
consumption smoothing
JEL: 
E21
E44
G21
G01
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

Files in This Item:
File
Size





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