Cutting the Credit Line: Evidence from Germany

40 Pages Posted: 21 Jun 2016

See all articles by Stefan Goldbach

Stefan Goldbach

Darmstadt University of Technology

Volker Nitsch

Darmstadt University of Technology - Department of Law and Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Date Written: 2015

Abstract

The massive decline in international trade in 2008/09 is often attributed to the global deterioration in financial conditions after the bankruptcy of a US investment bank, Lehman Brothers. This paper examines the association between external finance and firm activity in Germany in more detail. In particular, we explore a novel data set that matches a full sample of quarterly bank-firm lending data with detailed information on borrowers and lenders. Our results indicate that foreign sales are insensitive to variations in external finance. While German banks affected by the crisis have significantly reduced their credit supply, we only observe a causal (negative) effect on domestic sales. Exporting firms, in contrast, seem to be particularly good borrowers.

Keywords: trade finance, export finance, relationship lending

JEL Classification: E44, E32, G21, F40

Suggested Citation

Goldbach, Stefan and Nitsch, Volker, Cutting the Credit Line: Evidence from Germany (2015). Bundesbank Discussion Paper No. 25/2015, Available at SSRN: https://ssrn.com/abstract=2797050

Stefan Goldbach (Contact Author)

Darmstadt University of Technology ( email )

Marktplatz 15
Darmstadt, Hesse D-64289
Germany

Volker Nitsch

Darmstadt University of Technology - Department of Law and Economics ( email )

Marktplatz 15
Residenzschloss
Darmstadt, 64283
Germany

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, DE-81679
Germany

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