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  • June 2023
  • Article

Why Is Dollar Debt Cheaper? Evidence from Peru
By: Bryan Gutiérrez, Victoria Ivashina and Juliana Salomao
In emerging markets, a significant share of corporate loans are denominated in dollars. Using novel data that enables us to see currency and the cost of credit, in addition to several other transaction-level characteristics, we re-examine the reasons behind dollar...  View Details
Keywords: Emerging Market Corporate Debt; Currency Mismatch; Liability Dollarization; Carry Trade; Currency; Emerging Markets; Borrowing and Debt; Interest Rates; Peru
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  • February 2023
  • Supplement

Performance Management at Afreximbank (B)
By: Robert S. Kaplan, Siko Sikochi, Anna Ngarachu and Namrata Arora
Supplements the (A) case. Founded in October 1993, the Cairo-based African Export-Import Bank (Afreximbank) was a specialized continental financial institution designed to address the low level of intra-African trade, the decline in financial flows to Africa, the...  View Details
Keywords: COVID-19 Pandemic; Performance Evaluation; Organizational Culture; Crisis Management; Banking Industry; Africa
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  • 2023
  • Working Paper

Can Finance Save the World? Measurement and Effects of Bank Coal Exit Policies
By: Daniel Green and Boris Vallée
We study whether exit policies by financial institutions are an effective tool to address climate change, using bank policies targeting the coal industry around the world as a laboratory. In contrast to theories predicting divestment to be ineffective because capital...  View Details
Keywords: Coal Power; Climate Change; Investment; Environmental Sustainability; Policy; Financing and Loans; Banking Industry; Banking Industry
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  • July 2022
  • Article

Countercyclical Prudential Buffers and Bank Risk-taking
By: Manuel Illueca, Lars Norden, Joseph Pacelli and Gregory F. Udell
We investigate the effects of countercyclical prudential buffers on bank risk-taking. We exploit the introduction of dynamic loan loss provisioning in Spain, mandating that banks use historical average loss rates in their estimation of loan loss provisions. We find...  View Details
Keywords: Banks; Bank Regulation; Macroprudential Policies; Bank Lending; Loan Loss Provisioning; Risk Taking; Banks and Banking; Financing and Loans; Governing Rules, Regulations, and Reforms; Risk and Uncertainty
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  • 2022
  • Working Paper

Distributional Consequences of Monetary Policy Across Races: Evidence from the U.S. Credit Register
By: Laura Alfaro, Ester Faia and Camelia Minoiu
We examine the consequences of monetary policy on racial disparities, focusing on the role of bank lending to firms through collateral and selection channels. Leveraging comprehensive loan-level data from the U.S. credit register (Y-14Q) of the Federal Reserve, we show...  View Details
Keywords: Monetary Policy Transmission; Inequity; Credit Registry; Wealth; Collateral Channel; Selection; Racial Disparity; Racial Inequality; Equality and Inequality; Banks and Banking; Credit; Governing Rules, Regulations, and Reforms; Banking Industry; United States
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  • 2022
  • Chapter

Lessons Learned from Support to Business during COVID-19
By: Gabriel Chodorow-Reich, Benjamin Iverson and Adi Sunderam
The authors survey the new federal subsidies and loans provided to businesses in the first year of the pandemic—including the Paycheck Protection Program (PPP), the Economic Injury Disaster Loan (EIDL) program, and aid targeted at specific industries such as airlines...  View Details
Keywords: COVID-19 Pandemic; Small Business; Government Legislation; Policy
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  • Article

Weak Corporate Insolvency Rules: The Missing Driver of Zombie Lending
By: Bo Becker and Victoria Ivashina
"Zombie lending"—lending to less-productive firms at subsidized rates—can help banks with misaligned incentives in the short run, but it prolongs economic downturns. We propose that inefficient resolution of insolvency is a significant contributor to this problem. We...  View Details
Keywords: Zombie Credit; Insolvency and Bankruptcy; Financing and Loans; Economic Slowdown and Stagnation
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  • March 2022
  • Article

Loan Types and the Bank Lending Channel
By: Victoria Ivashina, Luc Laeven and Enrique Moral-Benito
Using credit-registry data for Spain and Peru, we document that four main types of commercial credit—asset-based loans, cash flow loans, trade finance and leasing—are easily identifiable and represent the bulk of corporate credit. We show that credit growth dynamics...  View Details
Keywords: Bank Credit; Loan Types; Bank Lending Channel; Credit Registry; Banks and Banking; Credit; Financing and Loans
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  • 2021
  • Working Paper

Racial Disparities in the Paycheck Protection Program
By: Sergey Chernenko and David S. Scharfstein
Using a large sample of Florida restaurants, we document significant racial disparities in borrowing through the Paycheck Protection Program (PPP) and investigate the causes of these disparities. Black-owned restaurants are 25% less likely to receive PPP loans....  View Details
Keywords: Discrimination; Paycheck Protection Program; Economic Injury Disaster Loans; Bank Lending; Nonbank Lending; Banks and Banking; Financing and Loans; Prejudice and Bias; Race
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  • 2021
  • Chapter

Business Continuity Insurance in the Next Disaster
By: Samuel Gregory Hanson, Adi Sunderam and Eric Zwick
This article draws lessons from the business support policies pursued in the COVID-19 pandemic to guide policy design for the next disaster. We contrast the performance of the Paycheck Protection Program to the Main Street Lending Program to illustrate how design...  View Details
Keywords: COVID-19 Pandemic; Policy; Economic Slowdown and Stagnation; Financing and Loans; United States
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  • November 2021
  • Article

Borrower Leakage from Costly Screening: Evidence from SME Lending in Peru
By: Irani Arraiz, Miriam Bruhn, Benjamin N. Roth, Claudia Ruiz-Ortega and Rodolfo Stucchi
We provide evidence that commercial lenders in Peru suffer leakages in their loan approval process. Leveraging a discontinuity in the loan approval process of a large bank, we find that receiving a loan approval from the bank causes loan applicants to receive offers...  View Details
Keywords: Information Spillovers; SME Lending; Financial Inclusion; Banks and Banking; Financing and Loans; Small Business; Information; Peru
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  • 2021
  • Chapter

Building Small Business Utopia: How Artificial Intelligence and Big Data Can Increase Small Business Success
By: Karen G. Mills and Annie Dang
Small business lending has remained unchanged for decades, laden with frictions and barriers that prevent many small businesses from accessing the capital they need to succeed. Financial technology, or “fintech,” promises to change this trajectory. In 2010, new fintech...  View Details
Keywords: Big Data; Fintech; Artificial Intelligence; Small Business; Financing and Loans; Capital; Success; AI and Machine Learning; Analytics and Data Science
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  • Article

Large Banks and Small Firm Lending
By: Vitaly Bord, Victoria Ivashina and Ryan D. Taliaferro
We examine the long-lasting effects of the 2007 real estate price collapse on small business credit supply. Banks affected by the decline in real estate prices systematically contracted their credit to small firms. At the same time, regional and local banks, many of...  View Details
Keywords: Small Firms; Credit Supply; Banking Competition; Small Business; Credit; Financial Crisis; Banks and Banking; Competition
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  • Article

The Harmonization of Lending Standards within Banks through Mandated Loan-Level Transparency
By: Jung Koo Kang, Maria Loumioti and Regina Wittenberg-Moerman
We explore whether the introduction of transparent reporting rules increases credit standard harmonization within a bank. We exploit the new loan-level reporting rules imposed on banks that borrow from the European Central Bank using repurchase agreements...  View Details
Keywords: Transparency; External And Internal Reporting; Credit Term Harmonization; Regulatory Scrutiny; Banks and Banking; Credit; Financial Reporting; Governing Rules, Regulations, and Reforms; Learning
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  • 2021
  • Working Paper

Nonbank Lending and Credit Cyclicality
By: Quirin Fleckenstein, Manasa Gopal, German Gutierrez and Sebastian Hillenbrand
We document three facts about nonbank lending in the syndicated loan market. First, nonbank lending is more than twice as cyclical as bank lending. Second, declines in nonbank lending explain most of the declines in syndicated lending during the Great Recession and...  View Details
Keywords: Nonbank Lending; Credit Cycles; CLO; Mutual Funds; Leveraged Lending; COVID-19; Great Migration; Non-bank Financial Institutions; Financing and Loans; Business Cycles
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  • March 2021
  • Supplement

Making Impact Investing Markets: IFC (B)
By: Shawn A. Cole, John Masko and T. Robert Zochowski
In 2018, Thailand’s Bank of Ayudhya (known as Krungsri), was considering whether to participate in the first issue of a new financial instrument from the International Finance Corporation (IFC), known as a gender bond. Building on the success of the Green Bond program...  View Details
Keywords: Impact Investment; Development Economics; Developing Countries and Economies; Borrowing and Debt; Credit; Equity; Bonds; Financing and Loans; Growth and Development; Emerging Markets; Non-Governmental Organizations; Corporate Social Responsibility and Impact; Financial Instruments; Gender; Financial Services Industry; Thailand
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  • March 2021
  • Article

Loan Guarantees and Credit Supply
By: Natalie Bachas, Olivia S. Kim and Constantine Yannelis
The efficiency of federal lending guarantees depends on whether guarantees increase lending supply or simply act as a subsidy to lenders. We use notches in the guarantee rate schedule for Small Business Administration (SBA) loans to estimate the elasticity of bank...  View Details
Keywords: Borrowing and Debt; Financing and Loans; Banks and Banking; Credit
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  • March 2021
  • Article

On the Direct and Indirect Real Effects of Credit Supply Shocks
By: Laura Alfaro, Manuel García-Santana and Enrique Moral-Benito
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...  View Details
Keywords: Credit Supply Shocks; Bank Lending Channel; Input-output Linkages; Output; Mechanisms; Trade Credits; Price Effects; Economics; Credit; System Shocks; Employment; Investment; Spain
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  • 2021
  • Working Paper

Crisis Interventions in Corporate Insolvency
By: Samuel Antill and Christopher Clayton
We model the optimal resolution of insolvent firms in general equilibrium. Absent externalities, the optimal corporate-insolvency system encourages lending by letting banks assign liquidations ex-post. We show that a social planner optimally intervenes in such a system...  View Details
Keywords: Insolvent Firms; Government Intervention; Liquidation; Econometric Models; Insolvency and Bankruptcy; Governance; Policy
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  • 2021
  • Working Paper

FinTech Lending and Cashless Payments
By: Pulak Ghosh, Boris Vallée and Yao Zeng
This study provides a new perspective to understand the rise and future potential of FinTech lending by linking it to the informational role of cashless payments. We uncover both theoretically and empirically a synergy between FinTech lending and cashless payments....  View Details
Keywords: Fintech; Lending; Payments; Data Sharing; Financing and Loans; Information Technology; Banks and Banking; Business Model
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