To Ask or Not To Ask? Bank Capital Requirements and Loan Collateralization

Degryse, Hans; Karapetyan, Artashes; Karmakar, Sudipto

doi:10.2139/ssrn.3290581

Cited by 16 publications

(15 citation statements)

References 38 publications

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“…We report estimates using two-way clustered standard errors at bank-time and firm level, as it allows us to address the threat that firm-shocks can be serially correlated and also bank-time shocks (our source of variation) can be correlated across firms. Our results are robust to alternative clustering levels and we report these estimates in the Internet Appendix.29 A number of papers study the effects of the 2011 EBA shock on banks' balance sheets and the real economy (e.g Blattner et al, 2019;DeGryse et al, 2019;Gropp et al, 2019)…”

mentioning

confidence: 71%

Policy uncertainty, lender of last resort and the real economy

Jasova

Mendicino

Supera

2021

Journal of Monetary Economics

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confidence: 71%

Policy uncertainty, lender of last resort and the real economy

Jasova

Mendicino

Supera

2021

Journal of Monetary Economics

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“…1 Relationship lending technologies have been found to significantly mitigate financial constraints in periods of financial distress, especially for small and informationally opaque firms (Angori et al, 2019;Beck et al, 2018). Degryse et al (2019) also show that banks facing higher capital requirements provide easier access to unsecured funding to firms with stronger lending relationships during crisis times.…”

Section: Financial Frictions In Credit Marketsmentioning

confidence: 99%

Heterogeneity and state dependence in firms’ access to bank credit

Aristei

Angori

2021

Small Bus Econ

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This paper investigates firms’ access to bank credit in eleven euro area countries over the periods 2014–2019. Exploiting firm-level longitudinal data, we analyse loan demand and credit rationing probabilities, accounting for sample selection, unobserved heterogeneity and state dependence. Empirical results show that small and informationally opaque businesses, with deteriorated public support and credit history, face greater difficulties in obtaining bank loans. Furthermore, we provide evidence of a significant degree of state dependence in access to credit. In particular, firms that have already experienced credit restrictions are more likely to face further constraints, while enterprises that applied for bank financing in the past seem to have easier access to credit. Focusing on the subset of firms actually needing additional bank financing, we also find that past credit restrictions significantly reduce their current demand, providing evidence of a significant discouragement effect.

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“…Therefore, following Degryse et al. (2019), we consider a loan as new when there is a new bank‐firm relationship or when there is a total bank loan outstanding increase from one year to the next.…”

Section: Datamentioning

confidence: 99%

Has the Crisis Introduced a New Paradigm in Banks' Credit Allocation? The Non‐financial Corporations' Perspective

Lopes¹,

Oliveira²,

Ramos³

et al. 2021

Financial Market

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In the years prior to the onset of the global financial crisis, the sharp credit growth, in a context of optimistic income expectations, boosted by an increase in competition in the banking system, less restrictive lending criteria and favorable financing conditions in international wholesale debt market, led to a marked rise in the debt levels of non‐financial corporations. In this paper, we use a panel data regression, with fixed effect estimators, to study how the relationship between bank credit granted to each firm and a set of firm‐specific indicators, that measure overall balance sheet performance and riskiness, changed over the 2006–2017 period. The results suggest that, during and after the Portuguese sovereign debt crisis, the sensitivity of the bank credit granted to firms to overall balance sheet strength and riskiness of firms increased, except in the case of leverage, where the sensitivity decreased slightly. Nonetheless, banks on average lent more to lower leveraged firms than to higher leveraged firms throughout the period considered. The results also show that statistical significance slightly reduces with the size of the firm and, when compared with the pre‐crisis sub‐period, banks did not increase lending to higher leveraged large firms in the crisis and post‐crisis sub‐periods. Finally, we find that the most capitalized banks were the ones more willing and/or able to support firms, during the crisis, even firms that experienced a deterioration in their indicators.

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To Ask or Not To Ask? Bank Capital Requirements and Loan Collateralization

Cited by 16 publications

References 38 publications

Policy uncertainty, lender of last resort and the real economy

Policy uncertainty, lender of last resort and the real economy

Heterogeneity and state dependence in firms’ access to bank credit

Has the Crisis Introduced a New Paradigm in Banks' Credit Allocation? The Non‐financial Corporations' Perspective

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