Aggregate Implications of Credit Relationship Flows: a Tale of Two Margins

This paper documents the aggregate properties of credit relationship flows within the commercial
loan market in France from 1998 through 2018. Using detailed bank-firm level data from the French
Credit Register, we show that banks actively and continuously adjust their credit supply along both
intensive and extensive margins. We particularly highlight the importance of gross flows associated
with credit relationships and show that they are (i) volatile and pervasive throughout the cycle, and
(ii) can account for up to 48 percent of the cyclical and 90 percent of the long-run variations in
aggregate bank credit.

Keywords: Credit Flows; Financial Institutions; Relationship Lending; Search and Matching.

JEL Classification: E51; G21; E52; E32

Suggested Citation: Suggested Citation

RPS Submitter, Banque de France and Boualam, Yasser and Mazet-Sonilhac, Clément, Aggregate Implications of Credit Relationship Flows: a Tale of Two Margins (January 2021). Banque de France Working Paper No. 801, Available at SSRN: https://ssrn.com/abstract=3840196 or http://dx.doi.org/10.2139/ssrn.3840196