The Real Effects of the Bank Lending Channel

51 Pages Posted: 11 Sep 2010 Last revised: 20 Nov 2014

See all articles by Gabriel Jiminez

Gabriel Jiminez

Banco de España

Atif R. Mian

Princeton University - Department of Economics; Princeton University - Princeton School of Public and International Affairs; NBER

José-Luis Peydró

Imperial College London; Centre for Economic Policy Research (CEPR); Universitat Pompeu Fabra - Faculty of Economic and Business Sciences

Jesus Saurina Salas

Banco de España

Date Written: November 1, 2014

Abstract

For policy and academia it is crucial to quantify the real effects of the bank lending channel. We analyze the impact of securitization of real estate assets on the supply of credit to non real-estate firms, including risk-taking, and the associated real effects. For identification, we use the credit register of Spain, matched with firm- and bank-level balance-sheet data, and generalize the Khwaja and Mian (2008)’s loan-level estimator to firm-level in order to identify the real aggregate effects of the bank lending channel. The robust results suggest a strong impact on credit supply to non real-estate firms of banks’ ability to securitize real-estate assets. However, this strong loan-level credit channel is neutralized by firm-level equilibrium dynamics in good times. In consequence, we find no real and credit effects at the firm-level. Importantly, securitization implies higher bank risk-taking, both by relaxing lending standards of existing borrowers – cheaper and less collateralized credit with longer maturity – and by a credit expansion on the extensive margin to first-time bank borrowers that substantially default more.

Keywords: lending channel, securitization, banking crises, Spain

JEL Classification: G21, G01, G17

Suggested Citation

Jiminez, Gabriel and Mian, Atif R. and Peydro, Jose-Luis and Saurina Salas, Jesus, The Real Effects of the Bank Lending Channel (November 1, 2014). Available at SSRN: https://ssrn.com/abstract=1674828 or http://dx.doi.org/10.2139/ssrn.1674828

Gabriel Jiminez

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

Atif R. Mian (Contact Author)

Princeton University - Department of Economics ( email )

Princeton, NJ 08544-1021
United States

Princeton University - Princeton School of Public and International Affairs ( email )

Princeton University
Princeton, NJ 08544-1021
United States

NBER

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Jose-Luis Peydro

Imperial College London ( email )

South Kensington Campus
Exhibition Road
London, Greater London SW7 2AZ
United Kingdom

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences ( email )

Ramon Trias Fargas 25-27
Barcelona, Barcelona 08005
Spain
(+34) 93 542 1756 (Phone)
(+34) 93 542 1746 (Fax)

HOME PAGE: http://https://sites.google.com/site/joseluispeydroswebpage/

Jesus Saurina Salas

Banco de España ( email )

Madrid 28014
Spain

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