Do Demand or Supply Factors Drive Bank Credit, In Good and Crisis Times?

European Banking Center Discussion Paper No. 2012-003

CentER Discussion Paper Series No. 2012-005

37 Pages Posted: 5 Jan 2012

See all articles by Gabriel Jiménez

Gabriel Jiménez

Banco de España

Steven Ongena

University of Zurich - Department of Banking and Finance; Swiss Finance Institute; KU Leuven; Centre for Economic Policy Research (CEPR)

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: April 27, 2017

Abstract

We analyze the impact of balance-sheet strength on credit availability. Bank balance sheets are weak in crisis times, but so are those of firms, and credit demand is then also weak. For identification, we exploit an administrative dataset of loan applications matched with bank and firm variables covering Spain from 2002 to 2010. Bank balance-sheet strength determines the granting of loan applications only in crisis times, while firm balance-sheet strength – notably leverage – determines strongly this granting in both good and crisis times. Our findings underscore the importance of the strength of corporate balance sheets over credit supply for credit availability.

Keywords: bank lending channel, credit supply, business cycle, credit crunch, capital

JEL Classification: E32, E44, E5, G21, G28

Suggested Citation

Jimenez, Gabriel and Ongena, Steven R. G. and Peydro, Jose-Luis and Saurina Salas, Jesus, Do Demand or Supply Factors Drive Bank Credit, In Good and Crisis Times? (April 27, 2017). European Banking Center Discussion Paper No. 2012-003, CentER Discussion Paper Series No. 2012-005, Available at SSRN: https://ssrn.com/abstract=2959509 or http://dx.doi.org/10.2139/ssrn.1980139

Gabriel Jimenez

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

Steven R. G. Ongena (Contact Author)

University of Zurich - Department of Banking and Finance ( email )

Schönberggasse 1
Zürich, 8001
Switzerland

Swiss Finance Institute

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

KU Leuven ( email )

Oude Markt 13
Leuven, Vlaams-Brabant 3000
Belgium

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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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