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Credit demand versus supply channels : experimental- and administrative-based evidence

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dc.contributor.author Michelangeli, Valentina
dc.contributor.author Peydró, José-Luis
dc.contributor.author Sette, Enrico
dc.date.accessioned 2021-02-12T13:17:03Z
dc.date.available 2021-02-12T13:17:03Z
dc.date.issued 2021-07
dc.identifier.uri http://hdl.handle.net/10230/46467
dc.description.abstract (July 2020) This paper identifies and quantifies –for the first time– the relative importance of borrower (credit demand) versus bank (supply) balance-sheet channels. We submit fictitious applications (varying households’ characteristics) to the major Italian online-mortgage platform. In this way we ensure that all banks receive exactly the same mortgage applications, and that –for each application– there are other identical ones except for one borrower-level characteristic. We find that: (i) Borrower and bank channels are equally strong in causing (and explaining) loan acceptance (each channel changes acceptance by 50 p.p. for the interquartile range and explains 29% of R-square). (ii) Differently, for pricing, borrower factors are much stronger. (iii) Banks supplying less credit accept riskier borrowers. Finally –exploiting administrative credit register data– we document borrower-lender assortative matching: safer banks have more credit relations with safer firms. Moreover, the measure of credit supply estimated in the experiment (differently from a very similar measure estimated from the observational mortgage data) determines bank credit supply to firms and risk-taking in administrative data.
dc.description.abstract (July 2021) We identify the relative importance for lending of borrower (demand) versus bank (supply) factors. We submit thousands of fictitious mortgage applications, changing one borrower-level factor at time, to the major Italian online mortgage platform. Each application goes to all banks. We find that borrower and bank factors are equally strong in causing and explaining loan acceptance. For pricing, borrower factors are instead stronger. Moreover, banks supplying less credit accept riskier borrowers. Exploiting the administrative credit register, we show borrower-lender assortative matching, and that the bank-level strength measure, estimated on the experimental data, determines credit supply and risk-taking to real firms.
dc.format.mimetype application/pdf
dc.language.iso eng
dc.relation.ispartofseries Barcelona GSE Working Paper;1192
dc.subject.other Credit demand
dc.subject.other Credit supply
dc.subject.other Bank lending channel
dc.subject.other Household balance sheet channel
dc.subject.other Mortgages
dc.subject.other SMEs
dc.subject.other Risk-taking
dc.title Credit demand versus supply channels : experimental- and administrative-based evidence
dc.type info:eu-repo/semantics/workingPaper
dc.rights.accessRights info:eu-repo/semantics/openAccess

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