Large Banks and Small Firm Lending
We show that since 2007, there was a large and persistent shift in the composition of lenders to small firms. Large banks impacted by the real estate prices collapse systematically contracted their credit to all small firms throughout the United States. However, healthy banks expanded their operations and entered new banking markets. The market share gain of these banks was a standard deviation above the long-run historical market share growth and persists for years following the financial crisis. Despite this offsetting expansion, the net effect of the contraction in credit was negative, with lower aggregate credit and deposits growth as well as lower entrepreneurial activity through 2015.
Keywords: Banks and Banking; Financing and Loans; Small Business; Financial Crisis;
Citation:
Bord, Vitaly, Victoria Ivashina, and Ryan D. Taliaferro. "Large Banks and Small Firm Lending." NBER Working Paper Series, No. 25184, October 2018. View Details