Abstract

http://ssrn.com/abstract=2187521
 
 

References (41)



 
 

Footnotes (46)



 


 



Do Credit Market Shocks Affect the Real Economy? Quasi-Experimental Evidence from the Great Recession and 'Normal' Economic Times


Michael Greenstone


University of Chicago - Department of Economics; Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER)

Alexandre Mas


Department of Economics and Woodrow Wilson School, Princeton University; National Bureau of Economic Research (NBER)

Hoai-Luu Q. Nguyen


Massachusetts Institute of Technology (MIT)

November 15, 2014

MIT Department of Economics Working Paper No. 12-27

Abstract:     
We estimate the effect of the reduction in credit supply that followed the 2008 financial crisis on the real economy. We predict county lending shocks using variation in pre-crisis bank market shares and estimated bank supply-shifts. Counties with negative predicted shocks experienced declines in small business loan originations, indicating that it is costly for these businesses to find new lenders. Using confidential microdata from the Longitudinal Business Database, we find that the 2007-2009 lending shocks accounted for statistically significant, but economically small, declines in both small firm and overall employment. Predicted lending shocks affected lending but not employment from 1997-2007.

Number of Pages in PDF File: 47

Keywords: Great Recession, bank lending, employment, small businesses

JEL Classification: D22, D53, G01, G1, G21, J01, J23

working papers series





Download This Paper

Date posted: December 10, 2012 ; Last revised: November 22, 2014

Suggested Citation

Greenstone, Michael and Mas, Alexandre and Nguyen, Hoai-Luu Q., Do Credit Market Shocks Affect the Real Economy? Quasi-Experimental Evidence from the Great Recession and 'Normal' Economic Times (November 15, 2014). MIT Department of Economics Working Paper No. 12-27. Available at SSRN: http://ssrn.com/abstract=2187521 or http://dx.doi.org/10.2139/ssrn.2187521

Contact Information

Michael Greenstone (Contact Author)
University of Chicago - Department of Economics ( email )
1126 East 59th Street
Chicago, IL 60637
United States
Massachusetts Institute of Technology (MIT) - Department of Economics ( email )
50 Memorial Drive
E52-391
Cambridge, MA 02142
United States
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Alexandre Mas
Department of Economics and Woodrow Wilson School, Princeton University ( email )
Princeton, NJ 08544-1021
United States
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Hoai-Luu Q. Nguyen
Massachusetts Institute of Technology (MIT) ( email )
77 Massachusetts Avenue
50 Memorial Drive
Cambridge, MA 02139-4307
United States
Feedback to SSRN


Paper statistics
Abstract Views: 2,291
Downloads: 629
Download Rank: 22,930
References:  41
Footnotes:  46
Paper comments
No comments have been made on this paper

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo8 in 0.265 seconds