Cookies?
Library Header Image
LSE Research Online LSE Library Services

Local bank financial constraints and firm access to external finance

Paravisini, Daniel (2008) Local bank financial constraints and firm access to external finance. The Journal of Finance, 63 (5). pp. 2161-2193. ISSN 0022-1082

Full text not available from this repository.

Abstract

I exploit the exogenous component of a formula-based allocation of government funds across banks in Argentina to test for financial constraints and underinvestment by local banks. Banks are found to expand lending by $0.66 in response to an additional dollar of external financing. Using novel data to measure risk and return on marginal lending, I show that the profitability of lending does not decline and total borrower debt increases during lending expansions, holding investment opportunities constant. Overall, financial shocks to constrained banks are found to have a quick, persistent, and amplified effect on the aggregate supply of credit.

Item Type: Article
Official URL: http://www.afajof.org/
Additional Information: © 2008 The American Finance Association
Library of Congress subject classification: H Social Sciences > HB Economic Theory
H Social Sciences > HG Finance
Journal of Economic Literature Classification System: D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D82 - Asymmetric and Private Information
E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E50 - General
G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
Sets: Departments > Finance
Collections > Economists Online
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Date Deposited: 16 Apr 2012 12:39
URL: http://eprints.lse.ac.uk/43108/

Actions (login required)

Record administration - authorised staff only Record administration - authorised staff only