Sharing the Pain? Credit Supply and Real Effects of Bank Bail-Ins

62 Pages Posted: 31 May 2018 Last revised: 30 Apr 2019

See all articles by Thorsten Beck

Thorsten Beck

City University London - Sir John Cass Business School; Tilburg University - European Banking Center, CentER

Samuel Da-Rocha-Lopes

New University of Lisbon - Nova School of Business and Economics; Aarhus University; European Banking Authority

André F. Silva

Federal Reserve Board

Multiple version iconThere are 2 versions of this paper

Date Written: June 2018

Abstract

We analyze the credit supply and real sector effects of bank bail-ins by exploiting the unexpected failure of a major Portuguese bank and subsequent resolution. Using a matched firm-bank dataset on credit exposures and interest rates, we show that while banks more exposed to the bail-in significantly reduced credit supply at the intensive margin, affected firms compensated the tightening of overall credit with other sources of funding. Nevertheless, SMEs were subject to a binding contraction of funds available through credit lines and reduced investment and employment. These dampening effects are explained by the pre-shock internal liquidity position of smaller firms.

JEL Classification: E22, E24, E58, G01, G21, G28, G32

Suggested Citation

Beck, Thorsten and Da-Rocha-Lopes, Samuel and Silva, André F., Sharing the Pain? Credit Supply and Real Effects of Bank Bail-Ins (June 2018). Available at SSRN: https://ssrn.com/abstract=3186544 or http://dx.doi.org/10.2139/ssrn.3186544

Thorsten Beck

City University London - Sir John Cass Business School ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom

Tilburg University - European Banking Center, CentER ( email )

PO Box 90153
Tilburg, 5000 LE
Netherlands

Samuel Da-Rocha-Lopes

New University of Lisbon - Nova School of Business and Economics ( email )

Campus de Campolide
Lisbon, 1099-032
Portugal

Aarhus University ( email )

Nordre Ringgade 1
Aarhus, 8000
Denmark

European Banking Authority ( email )

Floor 46
One Canada Square, Canary Wharf
London, E14 5AA
United Kingdom

André F. Silva (Contact Author)

Federal Reserve Board ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

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