The Real Effects of Banks' Corporate Credit Supply: A Literature Review
92 Pages Posted: 15 Oct 2019 Last revised: 13 Dec 2020
Date Written: October 1, 2019
Abstract
In this paper, we review the rapidly growing literature on the real effects of banks' corporate credit supply. We cover recent methodological advances and provide an in-depth survey of the existing evidence. The literature consistently shows that credit supply contractions lead to adverse real outcomes, but economic magnitudes vary across samples and identification strategies. This variation has become smaller in more recent work, using highly granular data. We further document heterogeneity in firm outcomes and show that the evidence is more ambiguous for expansionary shocks. Our analysis allows us to identify current knowledge gaps and worthwhile avenues for future research.
Keywords: Credit supply; Corporate credit; Bank health; Real effects
JEL Classification: G21, E22, E24, E50
Suggested Citation: Suggested Citation