Do all firms have equal access to external financing?

Neil Kay, Gavin Murphy, Conor O'Toole, Iulia Siedschlag, Brian O'Connell 29 June 2014

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The proportion of bank loan acceptances has fallen significantly following the crisis, along with the level of enterprise investment. The sharpest falls in both have been in countries hardest hit by the crisis. While in a number of countries – such as Finland, Malta, and Sweden – the declines have been modest, in others – such as in Bulgaria, Ireland, Denmark, Lithuania, Spain, and Greece – they have approached or exceeded 30%.

Figure 1. Percentage change in bank loan acceptances

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Topics:  EU policies Financial markets

Tags:  investment, lending, credit, Finance, SMEs, credit rationing, borrowing, information asymmetries

The ‘fear factor’: Personal experience and risk aversion in times of crisis

Peter Koudijs, Hans-Joachim Voth 12 April 2014

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To paraphrase Larry Summers, some people are scared – just look around. The crisis of 2007–08 took a toll on a lot of people, investors included. What seemed to be a new age of steady, moderately high growth and stable equity returns suddenly turned into the biggest economic crisis since the 1930s:

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Topics:  Economic history Financial markets

Tags:  financial markets, crisis, behaviour, risk aversion, lending

Foreign bank lending during the Crisis: Evidence on branches vs subsidiaries

John Hooley, Glenn Hoggarth, Yevgeniya Korniyenko 14 February 2014

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Foreign banks contribute potentially large longer-term benefits to their host economies (see, for example, Claessens and van Horen 2012). But the experience of the recent crisis has revealed that their lending can be more cyclical than that of domestic banks (Cetorelli and Goldberg 2011, Claessens and van Horen 2012, De Haas and Lelyveld 2011). The financial stability impact of retrenchment by foreign banks has been a major concern for some economies.

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Topics:  Global crisis International finance

Tags:  global crisis, foreign banks, lending, foreign subsidiaries

Dark side of housing-price appreciation

Indraneel Chakraborty, Itay Goldstein, Andrew MacKinlay 25 November 2013

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Policymakers around the world often worry about decreases in real-estate prices and other asset prices, and take measures to prevent them. For example, in the aftermath of the financial crisis, the Federal Reserve has engaged in large-scale asset purchases – especially of mortgage-backed assets – to support the housing market and, in turn, the overall economy.

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Topics:  Financial markets Monetary policy

Tags:  housing, Federal Reserve, investment, asset prices, banks, lending, real estate

From sovereign turmoil to private-sector woes: Italian sovereign spreads and their pass-through to bank lending conditions

Edda Zoli 15 June 2013

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Volatility in the Italian sovereign-debt market intensified in the summer of 2011, with ten-year government bond spreads climbing from below 200 basis points in June to over 500 at end-2011 and falling again in July 2012. In January of this year, they fell further to below 300 basis points. The sovereign turmoil ignited a vicious cycle of rising funding costs for banks, increasing borrowing costs for firms and households, and contracting credit and output.

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Topics:  Europe's nations and regions

Tags:  Italy, sovereign debt, banking, lending

Who gets the credit? And does it matter? Household vs. firm lending across countries

Thorsten Beck, Berrak Buyukkarabacak, Felix Rioja, Neven Valev 09 July 2009

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An extensive literature has documented the positive effect of financial development on economic growth and poverty reduction (Rajan and Zingales 1998; Beck, Levine and Loayza, 2000; Beck, Demirguc-Kunt and Levine, 2007).

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Topics:  Development Financial markets

Tags:  financial development, household credit, enterprise credit, lending, credit constraints

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