Working Paper: CEPR ID: DP13267
Authors: Gabriel Jiménez; José Luis Peydró; Rafael Repullo; Jesús Saurina
Abstract: We analyze a small, new credit facility of a Spanish state-owned-bank during the crisis, using its continuous credit scoring system, firm-level scores, and credit register data. Compared to privately-owned banks, the state-owned bank faces worse applicants, softens (tightens) its credit supply to unobserved (observable) riskier firms, and has much higher defaults. In a regression discontinuity design, the supply of public credit causes: large positive real effects to financially-constrained firms (whose relationship banks reduced substantially credit supply); crowding-in of new private-bank credit; and positive spillovers to other firms. Private returns of the credit facility are negative, while social returns are positive.
Keywords: real effects of public credit; credit scoring; credit crunch; crowding-in; adverse selection; state-owned banks
JEL Codes: E44; G01; G21; G28
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Public credit from state-owned bank (H81) | likelihood of survival for financially constrained firms (G33) |
| Public lending (F34) | employment growth (O49) |
| Public lending (F34) | total assets (G19) |
| Public lending (F34) | total sales (L81) |
| Public lending (F34) | investment and productivity (O49) |
| Public lending (F34) | likelihood of receiving subsequent private bank loans (G21) |
| Public lending (F34) | default rates at state-owned bank (G21) |