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Credit Rationing and Credit View: Empirical Evidence from an Ethical Bank in Italy

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  • LEONARDO BECCHETTI
  • MARIA MELODY GARCIA
  • GIOVANNI TROVATO

Abstract

Attempts have been made in the empirical literature to identify credit rationing and its determinants using balance sheet data or evidence from corporate surveys. However, observational equivalence, identification problems, and interview biases are serious problems in these studies. We analyze directly the determinants of credit rationing in credit files by examining the difference between the amounts demanded by and supplied to each borrower, as shown by official bank records. Our findings provide microeconomic evidence that supports the credit view hypothesis by showing that the European Central Bank refinancing rate is significantly and positively related to partial (but not total) credit rationing. This finding is consistent with the hypothesis that this variable affects the total volume of bank loans.
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  • Leonardo Becchetti & Maria Melody Garcia & Giovanni Trovato, 2011. "Credit Rationing and Credit View: Empirical Evidence from an Ethical Bank in Italy," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 43(6), pages 1217-1245, September.
    • Handle: RePEc:mcb:jmoncb:v:43:y:2011:i:6:p:1217-1245
    DOI: j.1538-4616.2011.00423.x
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