Abstract
Abstract
The collapse of long-term lending relationships amplified the Great Depression. We demonstrate this by developing a new measure of lending relationships that can be calculated from widely available data at any level of aggregation. Our approach exploits differences in the responsiveness of loan rates to bank funding costs and is supported by historical evidence and theoretical arguments. The new measure reveals that the marginal impact of bank suspensions on economic activity was higher in more relationship-intensive areas, providing the first formal evidence that relationship lending propagated the real effects of banking sector distress in the early 1930s.
Subject
Economics and Econometrics,Social Sciences (miscellaneous)
Reference35 articles.
1. Relationship Lending and Lines of Credit in Small
Firm Finance,;Berger;Journal of
Business,1995
2. Nonmonetary Effects of the Financial Crisis in the
Propagation of the Great Depression,;Bernanke;American Economic Review,1983
3. Relationship and Transaction Lending in a
Crisis,;Bolton;Review of Financial
Studies,2016
4. Consequences of Bank Distress during the Great
Depression,;Calomiris;American Economic
Review,2003
Cited by
12 articles.
订阅此论文施引文献
订阅此论文施引文献，注册后可以免费订阅5篇论文的施引文献，订阅后可以查看论文全部施引文献