Working Paper: NBER ID: w29326
Authors: Gary B. Gorton; Ping He
Abstract: Based on archival and survey data we show that the maturity of U.S. business loans has been continuously increasing since the mid-1930s when banks invented the term loan. Concurrently, bank innovation first involved the invention of credit analysis and covenant design. Later, bank innovation included the advent of loan sales, increased loan syndications, the opening of the leveraged loan market, and the securitization of loans in collateralized loan obligations. We estimate and calibrate a model of bank innovation to determine the quantitative contribution of bank innovation to economic growth.
Keywords: No keywords provided
JEL Codes: O00; O11; O30; O43
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Term loans (G21) | Increased loan maturity (G51) |
| Credit analysis (G21) | Increased loan maturity (G51) |
| Covenant design (D47) | Increased loan maturity (G51) |
| Loan sales (G21) | Increased loan maturity (G51) |
| Syndications (L14) | Increased loan maturity (G51) |
| Securitization of loans (G21) | Increased loan maturity (G51) |
| Increased loan maturity (G51) | Economic growth (O49) |