Bremus, Franziska and Neugebauer, Katja (2017) Don't stop me now: the impact of credit market fragmentation on firms' financing constraints. Systemic Risk Centre Discussion Papers (67). Systemic Risk Centre, The London School of Economics and Political Science, London, UK.
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Abstract
This paper investigates how the withdrawal of banks from their cross-border business impacted the borrowing costs of European firms since the crisis. We combine aggregate information on total and cross-border credit with firm-level survey data for the period 2010 - 2014. We find that the decline in cross-border lending led to a deterioration in the borrowing conditions of small firms. In countries with more pronounced reductions in cross-border credit inflows, the likelihood of a rise in firms’ external financing costs has increased. This result is mainly driven by the interbank channel, which plays a crucial role in transmitting shocks to the real sector across borders.
| Item Type: | Monograph (Discussion Paper) |
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| Official URL: | http://www.systemicrisk.ac.uk/ |
| Additional Information: | © 2017 The Authors |
| Divisions: | Systemic Risk Centre |
| Subjects: | H Social Sciences > HB Economic Theory H Social Sciences > HG Finance |
| JEL classification: | F - International Economics > F3 - International Finance > F34 - International Lending and Debt Problems F - International Economics > F3 - International Finance > F36 - Financial Aspects of Economic Integration G - Financial Economics > G1 - General Financial Markets > G15 - International Financial Markets G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages |
| Date Deposited: | 24 Mar 2017 16:47 |
| Last Modified: | 11 Dec 2024 19:24 |
| Projects: | ES/K002309/1 |
| Funders: | Economic and Social Research Council |
| URI: | http://eprints.lse.ac.uk/id/eprint/70774 |
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