Got Rejected? Real Effects of Not Getting a Loan

Review of Financial Studies, Forthcoming

72 Pages Posted: 23 Apr 2018

See all articles by Tobias Berg

Tobias Berg

Frankfurt School of Finance & Management

Multiple version iconThere are 2 versions of this paper

Date Written: April 4, 2018


Using a lender cutoff rule that generates plausibly exogenous variation in credit supply, I investigate a new channel through which funding shocks are transmitted to the real economy. Based on a sample of more than 15,000 loan applications from small- and medium-sized enterprises, I find that precautionary savings motives can aggravate real effects: low-liquidity firms whose loan applications were rejected increase cash holdings and cut noncash assets in excess of the requested loan amount. These results point to the amplifying effect of precautionary savings motives in the transmission of credit supply shocks.

Keywords: Credit supply, cash holdings, real effects, SMEs, precautionary savings

JEL Classification: G21, G32, J23

Suggested Citation

Berg, Tobias, Got Rejected? Real Effects of Not Getting a Loan (April 4, 2018). Review of Financial Studies, Forthcoming, Available at SSRN:

Tobias Berg (Contact Author)

Frankfurt School of Finance & Management ( email )

Adickesallee 32-34
Frankfurt am Main, 60322

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