Lending Organization and Credit Supply During the 2008–2009 Crisis

29 Pages Posted: 11 Aug 2017

Date Written: July 2017

Abstract

Using a dataset that combines bank organizational variables, information on firms' credit demand and balance sheet indicators, we investigate the impact of lending organization on credit dynamics during the 2008–2009 crisis period. Our main findings suggest that the variables shaping the organization of a bank in its lending to non‐financial firms have a complex impact on its ability to expand credit. Banks that made substantial use of credit scoring techniques actually reduced their credit expansion during the economic downturn. At the same time, banks that delegated more power to their branch managers were likely to expand loans at a higher rate. Finally, contrary to the evidence from the pre‐crisis period, we find that longer branch manager tenure in the same branch is detrimental to the credit growth rate. These findings are robust to a wide set of robustness checks.

Suggested Citation

Del Prete, Silvia and Pagnini, Marcello and Rossi, Paola and Vacca, Valerio Paolo, Lending Organization and Credit Supply During the 2008–2009 Crisis (July 2017). Economic Notes, Vol. 46, Issue 2, pp. 207-236, 2017. Available at SSRN: https://ssrn.com/abstract=3016663 or http://dx.doi.org/10.1111/ecno.12078

Silvia Del Prete (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Marcello Pagnini

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Paola Rossi

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Valerio Paolo Vacca

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

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