The Real Effects of Bank-Firm Relationships

41 Pages Posted: 15 Nov 2018

See all articles by Patrick Behr

Patrick Behr

Getulio Vargas Foundation (FGV) - Brazilian School of Public and Business Administration (EBAPE)

Lars Norden

Getulio Vargas Foundation (FGV) - Brazilian School of Public and Business Administration (EBAPE)

Raquel F. Oliveira

Central Bank of Brazil; Fundação Escola de Comércio Álvares Penteado (FECAP)

Date Written: October 31, 2018

Abstract

We investigate whether and how bank relationships affect real economic activity. We base our analysis on matched credit and labor data from Brazilian firms during 2005-2014. We document that firms with more bank relationships employ more workers and pay higher wages. Moreover, increases (decreases) of bank relationships result in higher (lower) economic activity. These effects are independent of firm size and due (but not limited) to higher credit availability and lower cost of credit. Importantly, the firm-level results consistently translate into positive macroeconomic effects at the municipality and state level. The evidence suggests positive real effects of multiple bank relationships.

Keywords: bank relationships, credit registry data, real effects, employment, wages

JEL Classification: G21, J21, O10

Suggested Citation

Behr, Patrick and Norden, Lars and Oliveira, Raquel F., The Real Effects of Bank-Firm Relationships (October 31, 2018). Available at SSRN: https://ssrn.com/abstract=3276655 or http://dx.doi.org/10.2139/ssrn.3276655

Patrick Behr

Getulio Vargas Foundation (FGV) - Brazilian School of Public and Business Administration (EBAPE) ( email )

Brazil

Lars Norden (Contact Author)

Getulio Vargas Foundation (FGV) - Brazilian School of Public and Business Administration (EBAPE) ( email )

Rua Jornalista Orlando Dantas 30
Rio de Janeiro, 22231-010
Brazil
+552130832431 (Phone)

HOME PAGE: http://www.larsnorden.de

Raquel F. Oliveira

Central Bank of Brazil ( email )

Av. Paulista, 1804 - 4o andar
Sao Paulo, SP 01310-922
Brazil

Fundação Escola de Comércio Álvares Penteado (FECAP)

Av. Liberdade, 532
Liberdade
São Paulo
Brazil

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