City Research Online

Sharing the Pain? Credit Supply and Real Effects of Bank Bail-ins

Beck, T. ORCID: 0000-0001-8382-2066, Silva, A. and Da-Rocha-Lopes, S. (2020). Sharing the Pain? Credit Supply and Real Effects of Bank Bail-ins. The Review of Financial Studies,

Abstract

We analyze the credit supply and real effects of bank bail-ins by exploiting the unexpected failure and subsequent resolution of a major Portuguese bank. Using matched firm-bank data on credit exposures and interest rates, we show that banks more exposed to the bail-in significantly reduced credit supply and tightened credit conditions at the intensive margin. While affected firms were on average able to compensate the reduction in overall credit, SMEs experienced a binding contraction of funds available through credit lines. Those with lower ex-ante internal liquidity responded to this shock by increasing precautionary cash holdings and reducing investment and employment.

Publication Type: Article
Additional Information: This is a pre-copyedited, author-produced version of an article accepted for publication in Review of Financial Studies following peer review. The version of record Beck, T. , Silva, A. and Da-Rocha-Lopes, S. (2020). Sharing the Pain? Credit Supply and Real Effects of Bank Bail-ins. The Review of Financial Studies, will be available online at:http://rfs.oxfordjournals.org/
Subjects: H Social Sciences > HG Finance
Departments: Cass Business School > Finance
URI: https://openaccess.city.ac.uk/id/eprint/23768
[img] Text - Accepted Version
This document is not freely accessible due to copyright restrictions.

Export

Downloads

Downloads per month over past year

View more statistics

Actions (login required)

Admin Login Admin Login