Credit Misallocation During the European Financial Crisis

Fabiano Schivardi, Enrico Sette and Guido Tabellini

No 6406, CESifo Working Paper Series from CESifo

Abstract: Using data on bank-firm relationships in Italy during the Eurozone financial crisis, we show that: (i) compared to healthy banks, under-capitalized banks cut credit to healthy but not to zombie firms and are more likely to prolong a credit relationship with a zombie; (ii) in areas-sectors with more low-capital banks, zombies are more likely to survive; (iii) nevertheless, bank under-capitalization does not hurt the growth rate of healthy firms. We provide evidence that extending credit to the weakest firms during the recession mitigated the disruption of supply chains and adverse local demand externalities.

Keywords: bank capitalization; zombie lending; capital misallocation (search for similar items in EconPapers)
JEL-codes: D23 E24 G21 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-ban, nep-eff and nep-mac
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Citations: View citations in EconPapers (85)

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https://www.cesifo.org/DocDL/cesifo1_wp6406.pdf (application/pdf)

Related works:
Journal Article: Credit Misallocation During the European Financial Crisis (2022)
Working Paper: Credit Misallocation During the European Financial Crisis (2018)
Working Paper: Credit Misallocation During the European Financial Crisis (2018)
Working Paper: Credit Misallocation During the European Financial Crisis (2017)
Working Paper: Credit misallocation during the European financial crisis (2017)
Working Paper: Credit misallocation during the European financial crisis (2017)
Working Paper: Credit Misallocation During the European Financial Crisis (2017)
Working Paper: Credit Misallocation During the European Financial Crisis (2017)
Working Paper: Credit Misallocation During the European Financial Crisis (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_6406

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