Credit Supply and Business Investment During the Great Recession: Evidence from Public Records of Equipment Financing (2012)
| Citations: | 2 - 0 self |
BibTeX
@MISC{Edgerton12creditsupply,
author = {Jesse Edgerton and Atif Mian and Karen Pence and Jonathan Rose and Stacey Tevlin},
title = {Credit Supply and Business Investment During the Great Recession: Evidence from Public Records of Equipment Financing},
year = {2012}
}
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Abstract
It is often asserted that the financial crisis of 2008 caused a recession in the real economy by restricting the supply of credit to firms and households, but this view has been questioned by a number of researchers. This paper uses novel data on lending relationships from Uniform Commercial Code filings of loans secured by business equip-ment to measure how lender distress affected firm-level investment outcomes after the crisis. In specifications that compare firms in the same county-industry-size cell, I find that firms that were dependent on lenders that experienced the most distress during the crisis financed significantly less equipment than average firms after the crisis, despite a considerable amount of substitution toward non-distressed lenders. Variation across lenders can account for a 17 % decline in aggregate equipment financing, or about one-third of the total decline in financing in the sample of small businesses used in the paper.
Keyphrases
great recession business investment public record credit supply lender distress financial crisis aggregate equipment financing uniform commercial code filing real economy average firm business equip-ment firm-level investment outcome non-distressed lender considerable amount county-industry-size cell small business novel data total decline
