Credit Market Fluidity

71 Pages Posted: 7 Jul 2022

See all articles by Yasser Boualam

Yasser Boualam

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School

Clément Mazet-Sonilhac

Banque de France; Collège de France; SciencesPo - Sciences Po - Department of Economics

Date Written: June 25, 2022

Abstract

We coin the term credit market fluidity to describe the intensity of credit reallocation, whose properties and implications we study within the commercial loan market in France over the period 1998 through 2018. We base our analysis on credit register data and thus provide a more complete account of gross credit flows across and within bank loan portfolios. We establish new stylized facts. Banks exhibit significant heterogeneity with respect to their reallocation rates. Idiosyncratic factors account for a large share of the level and variation of credit reallocation. Credit market fluidity is procyclical overall, yet the cross-bank reallocation component is mildly countercyclical. We also document that credit market fluidity is negatively correlated with credit growth and associate its secular decline in recent decades with a credit volume gap amounting to up to EUR 100 billion.

Keywords: Credit Flows, Credit Reallocation, Financial Institutions, Relationship Lending

JEL Classification: E40, E50, G20

Suggested Citation

Boualam, Yasser and Mazet-Sonilhac, Clément, Credit Market Fluidity (June 25, 2022). Kenan Institute of Private Enterprise Research Paper No. 4147826, Available at SSRN: https://ssrn.com/abstract=4147826 or http://dx.doi.org/10.2139/ssrn.4147826

Yasser Boualam (Contact Author)

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School ( email )

McColl Building
Chapel Hill, NC 27599-3490
United States

HOME PAGE: http://www.yasserboualam.com

Clément Mazet-Sonilhac

Banque de France ( email )

Paris
France

Collège de France ( email )

11 Place Marcelin Berthelot
Paris, 75231
France

SciencesPo - Sciences Po - Department of Economics ( email )

28, rue des Saints-Pères
Paris, Paris 75007
France

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