Bank Liquidity Provision Across the Firm Size Distribution

81 Pages Posted: 11 Oct 2020 Last revised: 23 Dec 2020

See all articles by Gabriel Chodorow-Reich

Gabriel Chodorow-Reich

Harvard University Department of Economics

Olivier Darmouni

Columbia University - Columbia Business School

Stephan Luck

Federal Reserve Bank of New York

Matthew C. Plosser

Federal Reserve Banks - Federal Reserve Bank of New York

Multiple version iconThere are 3 versions of this paper

Date Written: October 1, 2020

Abstract

We use supervisory loan-level data to document that small firms (SMEs) obtain shorter maturity credit lines than large firms; have less active maturity management; post more collateral; have higher utilization rates; and pay higher spreads. We rationalize these facts as the equilibrium outcome of a trade-off between lender commitment and discretion. Using the COVID recession, we test the prediction that SMEs are subject to greater lender discretion by examining credit line utilization. We show that SMEs do not drawdown in contrast to large firms despite SME demand, but that PPP loans helped alleviate the shortfall.

Keywords: Liquidity Provision, Macro-Finance, Credit, Financial Constraints, Loan Terms, Banking, Credit Lines, COVID-19

JEL Classification: G00, G20, G30

Suggested Citation

Chodorow-Reich, Gabriel and Darmouni, Olivier and Luck, Stephan and Plosser, Matthew C., Bank Liquidity Provision Across the Firm Size Distribution (October 1, 2020). Available at SSRN: https://ssrn.com/abstract=3702725 or http://dx.doi.org/10.2139/ssrn.3702725

Gabriel Chodorow-Reich

Harvard University Department of Economics ( email )

Littauer Center
Cambridge, MA 02138
United States
6174963226 (Phone)
6174963226 (Fax)

HOME PAGE: http://scholar.harvard.edu/chodorow-reich

Olivier Darmouni

Columbia University - Columbia Business School ( email )

3022 Broadway
New York, NY 10027
United States

Stephan Luck (Contact Author)

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

Matthew C. Plosser

Federal Reserve Banks - Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
225
Abstract Views
1,015
rank
126,013
PlumX Metrics