This paper empirically tests the role of bank lending tightening on non…nancial corporate (NFC) bond issuance in the eurozone. By utilizing a unique data set provided by the ECB Bank Lending Survey, we capture the "pure" credit supply e¤ect on corporate external …nancing. We …nd that tightened credit standards positively a¤ect the NFC bond issuance in a sample period of 2003 -2013: a 1pp increase in banks reporting considerable tightening on loans leads to around a 7% increase in …rms'bond issuance in the eurozone. Focusing on a spectrum of aspects contributing to bank credit tightening, we document that banks'balance sheet constraints, as well as the perception of risk lead to signi…cantly higher NFC bond issuance. In addition, we show that stricter lending conditions, such as wider margins, higher collateral requirements and covenants signi…cantly increase NFC bond issuance volumes too. Furthermore, the impact of bank credit tightening on …rms'bond issuance is particularly observable in core eurozone countries and not in peripheral countries. This is partially due to the underdeveloped debt capital markets in the peripheral countries.
This paper empirically tests the role of bank lending tightening on non…nancial corporate (NFC) bond issuance in the eurozone. By utilizing a unique data set provided by the ECB Bank Lending Survey, we capture the "pure" credit supply e¤ect on corporate external …nancing. We …nd that tightened credit standards positively a¤ect the NFC bond issuance in a sample period of 2003 -2013: a 1pp increase in banks reporting considerable tightening on loans leads to around a 7% increase in …rms'bond issuance in the eurozone. Focusing on a spectrum of aspects contributing to bank credit tightening, we document that banks'balance sheet constraints, as well as the perception of risk lead to signi…cantly higher NFC bond issuance. In addition, we show that stricter lending conditions, such as wider margins, higher collateral requirements and covenants signi…cantly increase NFC bond issuance volumes too. Furthermore, the impact of bank credit tightening on …rms'bond issuance is particularly observable in core eurozone countries and not in peripheral countries. This is partially due to the underdeveloped debt capital markets in the peripheral countries.
This paper analyzes the impact of securitization on access to finance for small and medium‐sized enterprises (SMEs) in the euro area. Using firm‐level survey data on SME financing conditions, we show that an increase in securitization issuance reduces the probability of SMEs facing credit constraints and decreases the costs of bank financing for nonconstrained firms. Our results reveal that in addition to the volume of securitization, its type and quality matter for credit extension to SMEs. The paper thus provides empirical support for recent initiatives to revive securitization in Europe and for effective monetary policy transmission in the euro area. (JEL D22, E44, E51, E58, G21)
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