Board of Governors of the Federal Reserve System (US)
Finance and Economics Discussion Series
Housing Bust, Bank Lending & Employment : Evidence from Multimarket Banks
I use geographic variation in bank lending to study how bank real estate losses impacted the supply of credit and employment during the Great Recession. Banks exposed to distressed housing markets cut mortgage and small business lending relative to other banks in the same county. This lending contraction had real eﬀects, as counties whose banks were exposed to adverse shocks in other markets suﬀered employment declines, especially in young ﬁrms. This ﬁnding is robust to instrumenting for bank exposure to housing shocks using shocks in distant markets, exposure based on historical lending, or exposure to markets with inelastic housing supply.
Cite this item
David P. Glancy, Housing Bust, Bank Lending & Employment : Evidence from Multimarket Banks, Board of Governors of the Federal Reserve System (US), Finance and Economics Discussion Series 2017-118, 01 Dec 2017.
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
Keywords: Bank lending ; Employment ; Financial crisis ; Residential real estate
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