Bank lending during the financial crisis of 2008

Ivashina, Victoria; Scharfstein, David

doi:10.1016/j.jfineco.2009.12.001

Cited by 2,152 publications

(1,082 citation statements)

References 12 publications

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“…Honohan (1999) shows disturbances can be transmitted through lending decisions due to banks over-committing to risky lending. Our paper adds to this strand of studies by examining contagion arising from lending-side risk, in particular, due to banks' joint exposure to a syndicated loan.3 F This is supported by empirical evidence in Ivashina and Scharfstein (2010), who find that banks co-syndicated with Lehman suffered more stresses of liquidity, indicating that Lehman's failure put more of the funding burden on other members of the syndicate and exposed them to increased likelihood that more firms would draw on their credit lines.…”

mentioning

confidence: 59%

Bank capital, interbank contagion, and bailout policy

Tian

Yang

Zhang

2013

Journal of Banking & Finance

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mentioning

confidence: 59%

Bank capital, interbank contagion, and bailout policy

Tian

Yang

Zhang

2013

Journal of Banking & Finance

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“…During recessions, profits decrease (Beaver, 2002), bank credit is restricted or more expensive (Ivashina & Scharfstein, 2010), and equity markets typically "dry up" (Latham & Braun, 2008). With limited funding, firms have to reduce costs, bypass projects, and cut investments (Campello, Graham, & Harvey, 2010).…”

Section: Theory Development and Hypothesesmentioning

confidence: 99%

“…As the recession hits various industries, most businesses face cash flow challenges due to lower profits (Beaver, 2002) and reduced bank credit (Ivashina & Scharfstein, 2010). It becomes more common for customers to default and request loosening of pay-ment terms (Ang et al, 2000).…”

Section: Capital Strategiesmentioning

confidence: 99%

Strategies for Superior Performance in Recessions: Pro or Counter-Cyclical?

Conti¹,

Goldszmidt

Vasconcelos

2015

Rev. adm. empres.

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Estratégias para desempenho superior em recessões: pro ou contra-cíclicas? Estrategias para el desempeño superior en las recesiones: ¿pro o contra cíclicas?ABSTRACT Recessions are recurring events in which most firms suffer severe impacts while others are less affected or may even prosper. Strategic management has made little progress in understanding such performance differences. In a scenario of decreased demand, intensified competition, and higher uncertainty, most firms try to survive by pro-cyclically cutting costs and investments. But firms could take advantage of undervalued resources in the market to counter-cyclically invest in new business opportunities to overtake competitors. We survey Brazilian firms in various industries about the [2008][2009] recession and analyze data using PLS-SEM. We find that while most firms pro-cyclically reduce costs and investments in recessions, a counter-cyclical strategy of investing in opportunities created by changes in the market enables superior performance. Most successful are firms with a propensity to recognize opportunities, an entrepreneurial orientation to invest, and the flexibility to efficiently implement investments.KEYWORDS | Recession, cycle, opportunity, entrepreneurship, flexibility. RESUMO Recessões são eventos recorrentes nos quais a maioria das empresas sofre impactos severos enquanto outras são menos afetadas ou até prosperam. A gestão estratégica tem feito pouco progresso para entender tais diferenças de desempenho. Em um cenário de demanda reduzida, competição aumentada e muitas incertezas, a maioria das empresas tenta sobreviver cortando custos e investimentos, de maneira pró-cíclica. Mas as empresas poderiam aproveitar os recursos subestimados no mercado para investir, contra-ciclicamente, em novas oportunidades de negócios para superar a concorrência. Pesquisamos empresas brasileiras em várias indústrias sobre a recessão de 2008-2009 e analisamos dados usando PLS-SEM. Descobrimos que enquanto a maioria das empresas reduzem custos e investimento pró-ciclicamente durante as recessões, uma estratégia contra-cíclica de investir em oportunidades criadas pelas mudanças no mercado possibilitam desempenho superior. Firmas com propensão a reconhecer oportunidades, com orientação empresarial para investir e com flexibilidade para implementar os investimentos de modo eficiente são as mais bem sucedidas. PALAVRAS-CHAVE | Recessão, ciclo, oportunidade, empreendedorismo, flexibilidade. RESUMEN Las recesiones son eventos recurrentes en los cuales la mayoría de las empresas sufre impactos severos mientras que otras son menos afectadas o incluso RAE-Revista de Administração de Empresas | FGV-EAESP

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“…Between the second quarter of 2008 and the second quarter of 2010, small business loans made by commercial banks declined by over $40 billion. Recent evidence suggests that much of the decline in new lending re ‡ects changes in the supply of credit (Ivashina andScharfstein 2010, Huang andStephens 2011). Similarly, the responses to the Federal Reserve's Senior Loan O¢ cer Opinion Survey on Bank Lending Practices indicate that banks have signi…cantly tightened credit standards on Commercial and Industrial loans to small …rms in thirteen consecutive quarters between 2007:Q1 and 2010:Q1.…”

Section: Introductionmentioning

confidence: 99%

Financing Constraints and Unemployment: Evidence from the Great Recession

Duygan-Bump¹,

Levkov²,

Montoriol‐Garriga³

2014

SSRN Journal

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This paper exploits the differential financing needs across industrial sectors and provides strong empirical evidence that financing constraints of small businesses in the United States are important in explaining the unemployment dynamics during the Great Recession. We show that workers in small firms are more likely to become unemployed during the 2007-09 financial crisis if they work in industries with high external financing needs. We find very similar results for the 1990-91 recession, but not for the 2001 recession, where only the former was associated with a reduction in loan supply. These findings further support the credit constraints hypothesis.

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Bank lending during the financial crisis of 2008

Cited by 2,152 publications

References 12 publications

Bank capital, interbank contagion, and bailout policy

Bank capital, interbank contagion, and bailout policy

Strategies for Superior Performance in Recessions: Pro or Counter-Cyclical?

Financing Constraints and Unemployment: Evidence from the Great Recession

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