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Access to Credit in a Market Downturn

Author

Listed:
  • Barbara Casu

    (University of London)

  • Laura Chiaramonte

    (University of Verona)

  • Ettore Croci

    (Università Cattolica del Sacro Cuore)

  • Stefano Filomeni

    (University of Essex)

Abstract

Using a unique proprietary dataset from a large European commercial bank containing granular loan-level information on credit lines to mid-corporate firms, we investigate the bank’s decisions to allow firms to retain existing credit at a time of acute financial instability. Our results highlight the importance of bank-firm relationships during crisis times. Existing borrowers who actively used their credit lines were not rationed, unless they posed an increased credit risk. We do not find evidence of evergreening practices.

Suggested Citation

  • Barbara Casu & Laura Chiaramonte & Ettore Croci & Stefano Filomeni, 2024. "Access to Credit in a Market Downturn," Journal of Financial Services Research, Springer;Western Finance Association, vol. 66(2), pages 143-169, October.
    • Handle: RePEc:kap:jfsres:v:66:y:2024:i:2:d:10.1007_s10693-022-00388-x
    DOI: 10.1007/s10693-022-00388-x
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    More about this item

    Keywords

    Credit lines; Credit risk; Sovereign debt crisis; Credit rationing;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

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