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Working Paper
Bank Responses to the 2014 Oil Price Shock
We exploit the 2014 decline in oil prices to understand how banks change contract terms for distressed firms. Using panel data on new and existing loans, we find that oil and gas firms (i.e., upstream and support services) most directly affected by the 2014 oil price shock initially increased their use of credit. However, as the oil price decline persisted, those same firms ultimately saw increased borrowing costs, smaller loan sizes, and fewer originations and renewals than less affected oil industry firms. We then demonstrate that credit spreads rose more than might be predicted based on ...
Working Paper
Examining the Financial Accelerator: Bank Responses to the 2014 Oil Price Shock
We exploit the 2014 decline in oil prices to understand how banks change contract terms for distressed firms. Using panel data on new and existing loans, we find that firms most financially affected by the 2010 oil price shock initially increased their use of credit. However, those same firms ultimately saw increased borrowing costs, smaller loan sizes, and fewer originations and renewals than less affected firms as the oil price decline persisted. We then demonstrate that credit spreads rose more than might be predicted based on changes in firm risk alone, suggesting that lending standards ...