This paper assesses the effect of the recent economic and sovereign debt crisis on credit demand and supply and the terms and conditions of bank financing for small and medium enterprises (SMEs) across euro area countries. We combine firm micro data with real and financial macroeconomic variables to examine which factors are important for supply and which for demand. We find that real economic ...

We collect information about multinational banks’ internal capital markets from interviews with over 400 bank CEOs across emerging Europe. Using these unique data, we document substantial variation in how banks financially manage foreign subsidiaries and then assess how this variation affected local credit growth during the Great Recession. We show that subsidiaries grew faster if the parent ba...

We develop a dynamic general equilibrium model of capital accumulation where credit is intermediated by banks operating in a Cournot oligopoly. The number of banks affects capital accumulation through two channels. First, it affects the quantity of credit available to entrepreneurs. Second, it affects banks’ decisions to collect costly information about entrepreneurs, and thus determines the ef...

The evolving financial environment facing the corporate sector provides many non-bank external finance options as an alternative to bank finance and this paper examines the relationship between UK firms’ choices over bank versus non-bank finance under different monetary conditions. We look at the external finance 'mix' using a panel of 16,000 UK firm records taken from the FAME database for the...

This paper constructs a multiple regression model to evaluate the overdue risk of credit card holders. The results can identify the factors influencing the credit card holders’ overdue risk behavior in order to provide card issuing banks a decision-making reference in the investigation of credit card holders’ related characteristics and the relationship quality between the credit card holders a...

Other papers presented at this conference have documented the substantial recent decline in real estate prices and the impact of this decline on financial institutions. This paper will take the decline in bank capital as a result of exposure to real estate as given, and address how banks have responded to their deteriorated financial condition. The paper will show that real estate losses, combi...

This paper investigates the factors affecting bank operational risk and bank equity risk for European banks during 1996 to 2005. Pooled-OLS and panel data analysis is applied to 84 financial institutions across 15 European countries using credit risk, interest rate risk, total equity, systematic risk and idiosyncratic risk. Off-balance sheet activities are positively correlated with all the ris...

We study the impact of bank credit supply on the output and productivity of borrower firms. Exploiting a matched firm-bank database covering all credit relationships of Italian corporations over more than a decade, we measure idiosyncratic supply-side shocks to firm credit availability. Then, we estimate a production model augmented with heterogeneous financial frictions, to show that an expans...

A dynamic stochastic model of a small open economy with a twolevel banking intermediation structure, a risk-sensitive regulatory capital regime, and imperfect capital mobility is developed. Firms borrow from a domestic bank and the bank borrows on world capital markets, in both cases subject to a premium. A sudden flood in capital flows generates an expansion in credit and activity, as well as ...