Credit Misallocation During the European Financial Crisis

Fabiano Schivardi, Guido Tabellini and Enrico Sette

No 11901, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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: 2017-07
New Economics Papers: this item is included in nep-ban, nep-eff and nep-mac
References: Add references at CitEc
Citations: View citations in EconPapers (79)

Downloads: (external link)
https://cepr.org/publications/DP11901 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

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)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:11901

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP11901

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().