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Contribution Details
| Type | Conference Presentation |
| Scope | Discipline-based scholarship |
| Title | Some borrowers are more equal than others: Bank funding shocks and credit reallocation |
| Organization Unit | |
| Authors |
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| Presentation Type | paper |
| Item Subtype | Original Work |
| Refereed | Yes |
| Status | Published electronically before print/final form (Epub ahead of print) |
| Language |
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| Event Title | American Economic Association, 2017 Annual Meeting |
| Event Type | conference |
| Event Location | Chicago |
| Event Start Date | January 6 - 2017 |
| Event End Date | January 8 - 2017 |
| Abstract Text | This paper provides evidence on the strategic lending decisions made by banks facing a negative funding shock. Using bank- rm level credit data, we show that banks reallocate credit within their domestic loan portfolio in at least three di erent ways. First, banks reallocate to sectors where they have high sector presence. Second, they also reallocate to sectors in which they are heavily specialized. Third, they reallocate credit towards low-risk rms. These reallocation e ects are economically large. A standard deviation improvement in sector presence, sector specialization or rm risk reduces the transmission of the funding shock to credit supply by 20, 13 and 10%, respectively. We also provide insight in the timing of these reallocation decisions. Reallocation to sectors in which a bank has a high sector presence is almost instantaneous, while sector specialization starts playing a role four to ve months after the shock. |
| Official URL | https://www.aeaweb.org/conference/ |
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