The Association between Bank Credit Terms and Conditions and the Business Cycle in the Euro-Area

16 Pages Posted: 27 Mar 2020

See all articles by Dimitrios Anastasiou

Dimitrios Anastasiou

Alpha Bank; Athens University of Economics and Business, School of Business, Department of Accounting and Finance

Konstantinos Drakos

Athens University of Economics and Business - Department of Accounting and Finance

Date Written: February 22, 2020

Abstract

We explore the trajectory of bank loan Terms and Conditions over the business cycle, where the latter is decomposed into its long-run (trend) and short-run (cyclical) components. We find that deterioration of each business cycle component leads to a significant tightening of credit terms and conditions. We found mixed results concerning the symmetry of impacts of the short and long run components. Symmetry was found between the terms and conditions on loans for small vs. large enterprises. Our findings provide very useful information to policy makers and thus they should be taken into consideration when monetary policies are designed.

Keywords: Credit Terms and Conditions; Business Cycle; Bank Lending Survey

JEL Classification: E30, E32, E44, G21

Suggested Citation

Anastasiou, Dimitrios and Drakos, Konstantinos, The Association between Bank Credit Terms and Conditions and the Business Cycle in the Euro-Area (February 22, 2020). Available at SSRN: https://ssrn.com/abstract=3542810 or http://dx.doi.org/10.2139/ssrn.3542810

Dimitrios Anastasiou (Contact Author)

Alpha Bank ( email )

Athens, 16561
Greece

Athens University of Economics and Business, School of Business, Department of Accounting and Finance ( email )

76 Patission Street
GR-104 34 Athens
Greece

Konstantinos Drakos

Athens University of Economics and Business - Department of Accounting and Finance ( email )

76 Patission Street
GR-104 34 Athens
Greece

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