Arbeitspapier

Banks' financial distress, lending supply and consumption expenditure

to connected objects

We employ a unique identification strategy linking survey data on household consumption expenditure to bank-level data to estimate the effects of bank financial distress on consumer credit and consump- tion expenditures. We show that households whose banks were more exposed to funding shocks report lower levels of non-mortgage liabilities. This, however, does not result in lower levels of consumption. Households compensate by drawing down liquid assets to smooth consumption in the face of a temporary adverse lending supply shock. The results contrast with recent evidence on the real effects of finance on firms' investment and employment decisions.

Language: Englisch

Bibliographic citation: Series: SAFE Working Paper ; No. 39

Classification: Wirtschaft
Macroeconomics: Consumption; Saving; Wealth
Financial Markets and the Macroeconomy
Banks; Depository Institutions; Micro Finance Institutions; Mortgages
Financial Crises

Subject: Credit supply
banking
financial crisis
consumption expenditure
liquid assets
consumption smoothing

Event: Geistige Schöpfung

(who): Damar, H. Evren
Gropp, Reint E.
Mordel, Adi

Event: Veröffentlichung

(who): Goethe University Frankfurt, SAFE - Sustainable Architecture for Finance in Europe

(where): Frankfurt a. M.

(when): 2014

DOI: doi:10.2139/ssrn.2375103

Handle: http://hdl.handle.net/10419/203273

Last update: 10.03.2025, 11:42 AM CET

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Object type

Arbeitspapier

Associated

Damar, H. Evren
Gropp, Reint E.
Mordel, Adi
Goethe University Frankfurt, SAFE - Sustainable Architecture for Finance in Europe

Time of origin

2014

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