Sharing the Pain Credit Supply & Real Effects of Bank Bail-ins

62 Pages Posted: 5 Jan 2021

See all articles by Samuel Da-Rocha Lopes

Samuel Da-Rocha Lopes

European Banking Authority

Thorsten Beck

City University London - Sir John Cass Business School; European University Institute; Centre for Economic Policy Research (CEPR)

André F. Silva

Board of Governors of the Federal Reserve System

Date Written: June 21, 2018

Abstract

We analyze the credit supply and real sector effects of bank bail-ins by exploiting the unexpected failure of a major Portuguese bank and subsequent resolution. Using a matched firm-bank dataset on credit exposures and interest rates, we show that while banks more exposed to the bail-in significantly reduced credit supply at the intensive margin, affected firms compensated the tightening of overall credit with other sources of funding. Nevertheless, SMEs were subject to a binding contraction of funds available through credit lines and reduced investment and employment. These dampening effects are explained by the pre-shock internal liquidity position of smaller firms.

JEL Classification: E22, E24, E58, G01, G21, G28, G32

Suggested Citation

Da-Rocha Lopes, Samuel and Beck, Thorsten and Silva, André F., Sharing the Pain Credit Supply & Real Effects of Bank Bail-ins (June 21, 2018). European Banking Authority Research Paper No. 1, Available at SSRN: https://ssrn.com/abstract=3758417 or http://dx.doi.org/10.2139/ssrn.3758417

Samuel Da-Rocha Lopes (Contact Author)

European Banking Authority ( email )

20 avenue André Prothin CS 30154
One Canada Square, Canary Wharf
92927 Paris, La Défense CEDEX E14 5AA
France

Thorsten Beck

City University London - Sir John Cass Business School ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom

European University Institute

Villa Schifanoia
133 via Bocaccio
Firenze (Florence), Tuscany 50014
Italy

Centre for Economic Policy Research (CEPR)

London
United Kingdom

André F. Silva

Board of Governors of the Federal Reserve System ( email )

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

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

Paper statistics

Downloads
66
Abstract Views
294
rank
456,625
PlumX Metrics