Housing Bust, Bank Lending & Employment: Evidence from Multimarket Banks

42 Pages Posted: 8 Dec 2019

See all articles by David Glancy

David Glancy

Board of Governors of the Federal Reserve System

Date Written: September 13, 2018

Abstract

Using geographic variation in bank lending, I study how bank real estate losses affected the supply of credit and employment during the Great Recession. Banks exposed to distressed housing markets cut mortgage and small business lending relative to other banks in the same county. This lending contraction had real effects, as counties whose banks were exposed to adverse shocks in other markets suffered employment declines, especially in young firms. This finding is robust to instrumenting for bank exposure to housing shocks using shocks in distant markets, exposure based on historical lending, or exposure to markets with inelastic housing supply.

Keywords: Bank lending, Employment, Financial crisis, Real estate

JEL Classification: E24, E44, G21

Suggested Citation

Glancy, David, Housing Bust, Bank Lending & Employment: Evidence from Multimarket Banks (September 13, 2018). Available at SSRN: https://ssrn.com/abstract=3249040 or http://dx.doi.org/10.2139/ssrn.3249040

David Glancy (Contact Author)

Board of Governors of the Federal Reserve System ( email )

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

HOME PAGE: http://sites.google.com/view/davidglancy

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