Search Results
Briefing
The Collateral Channel and Bank Credit
We identify the firm-level and aggregate effects of collateral price shocks on business lending and investment — also known as the collateral channel — using detailed bank-firm-loan level data that allow us to observe the pledging of real estate collateral and to control for credit demand and supply conditions. At the firm level, a 1-percentage-point increase in collateral values leads to an increase of 12 basis points in credit growth, whereas the average elasticity of credit to collateral values in the cross-section of metropolitan statistical areas (MSAs) is seven times larger. Our ...
Working Paper
The Collateral Channel and Bank Credit
Our paper studies the role of the collateral channel for bank credit using confidential bank-firm-loan data. We estimate that for a 1 percent increase in collateral values,firms pledging real estate collateral experience a 12 basis point higher growth in banklending with higher sensitivities for more credit constrained firms. Higher real estatevalues boost firm capital expenditures and lead to lower unemployment and higheremployment growth and business creation. Our estimates imply that as much as 37percent of employment growth over the period from 2013 to 2019 can be attributed to the ...
Working Paper
The Collateral Channel and Bank Credit
Our paper studies the role of the collateral channel for bank credit using confidential bank-firm-loan data. We estimate that for a 1 percent increase in collateral values, firms pledging real estate collateral experience a 12 basis point higher growth in bank lending with higher sensitivities for more credit constrained firms. Higher real estate values boost firm capital expenditures and lead to lower unemployment and higher employment growth and business creation. Our estimates imply that as much as 37 percent of employment growth over the period from 2013 to 2019 can be attributed to the ...
Working Paper
The Collateral Channel and Bank Credit
We examine the firm-level and aggregate effects of the collateral channel using administrative bank-firm-loan level data. We introduce novel instrumental variables related to the efficiency of federal district bankruptcy courts and show their importance as predictors of collateral use and banks' expected losses given default across collateral types. Our estimates reveal that following increases in real estate values, firms that pledge real estate experience an expansion in bank credit, reductions in credit spreads, and an extension in the maturity of loans that allows for increases in firm ...