Working Paper: CEPR ID: DP12994
Authors: Giovanni Dell'Ariccia; Dalida Kadyrzhanova; Camelia Minoiu; Lev Ratnovski
Abstract: We study bank portfolio allocations during the transition of the real sector to a knowledgeeconomy in which firms increasingly use intangible assets. We show that higher corporateinvestment in intangible assets slows down banks' commercial lending. Banks reallocate theresulting lending capacity to other assets, notably mortgages. The findings are consistent withfinancial intermediation frictions due to lower collateral value of corporate intangible assets.Additional tests rule out alternative explanations such as higher mortgage demand. We estimatethat higher corporate intangible assets conservatively explain 25-40% of the decline in bankcommercial lending since the mid-1980s.
Keywords: corporate intangible assets; bank lending; commercial loans; real estate loans
JEL Codes: E22; E44; G21
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Increase in corporate intangible assets (O34) | Decrease in banks' commercial loan growth (G21) |
| Increase in corporate intangible assets (O34) | Shift in banks' lending capacity towards non-commercial assets (G21) |
| Decrease in banks' commercial loan growth (G21) | Increase in mortgage loan volumes and acceptance rates (G21) |
| Increase in corporate intangible assets (O34) | Lower profitability in real estate loans (G21) |
| Increase in corporate intangible assets (O34) | Reduced collateral value of intangible assets (G32) |
| Rise in corporate intangible assets (O34) | Decline in the share of commercial loans in bank portfolios (G21) |