Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • March 2021
  • Article
  • Journal of Financial Economics

On the Direct and Indirect Real Effects of Credit Supply Shocks

By: Laura Alfaro, Manuel García-Santana and Enrique Moral-Benito
  • Format:Print
ShareBar

Abstract

We explore the real effects of bank-lending shocks and how they permeate the economy through buyer-supplier linkages. We combine administrative data on all Spanish firms with a matched bank-firm-loan dataset of all corporate loans from 2003 to 2013 to estimate firm-specific credit supply shocks for each year. We compute firm-specific measures of exposure to bank lending shocks of customers (upstream propagation) and suppliers (downstream propagation). Our findings suggest that credit supply shocks have sizable direct and downstream propagation effects on employment, investment, and output, especially during the 2008-2009 crisis, but no significant impact on employment during the expansion. We provide evidence that both trade credit extended by suppliers and price adjustments in general equilibrium explain downstream propagation of credit shocks.

Keywords

Credit Supply Shocks; Bank Lending Channel; Input-output Linkages; Output; Mechanisms; Trade Credits; Price Effects; Economics; Credit; System Shocks; Employment; Investment; Spain

Citation

Alfaro, Laura, Manuel García-Santana, and Enrique Moral-Benito. "On the Direct and Indirect Real Effects of Credit Supply Shocks." Journal of Financial Economics 139, no. 3 (March 2021): 895–921.
  • Find it at Harvard
  • Read Now

About The Author

Laura Alfaro

General Management
→More Publications

More from the Authors

    • 2022
    • Faculty Research

    Distributional Consequences of Monetary Policy Across Races: Evidence from the U.S. Credit Register

    By: Laura Alfaro, Ester Faia and Camelia Minoiu
    • AEA Papers and Proceedings

    Undisclosed Debt Sustainability

    By: Laura Alfaro and Fabio Kanczuk
    • March 2022 (Revised June 2022)
    • Faculty Research

    El Salvador: Launching Bitcoin as Legal Tender

    By: Laura Alfaro, Carla Larangeira and Ruth Costas
More from the Authors
  • Distributional Consequences of Monetary Policy Across Races: Evidence from the U.S. Credit Register By: Laura Alfaro, Ester Faia and Camelia Minoiu
  • Undisclosed Debt Sustainability By: Laura Alfaro and Fabio Kanczuk
  • El Salvador: Launching Bitcoin as Legal Tender By: Laura Alfaro, Carla Larangeira and Ruth Costas
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Accessibility
  • Digital Accessibility
Copyright © President & Fellows of Harvard College