The Decline of Big-Bank Lending to Small Business: Dynamic Impacts on Local Credit and Labor Markets
Year: 2017
Type: report
Abstract: Small business lending by the four largest banks fell sharply relative to others in 2008 and remained depressed through 2014.We explore the dynamic adjustment process following this credit supply shock.In counties where the largest banks had a high market share, the aggregate flow of small business credit fell, interest rates rose, fewer businesses expanded, unemployment rose, and wages fell from 2006 to 2010.While the flow of credit recovered after 2010 as other lenders slowly filled the void, interest rates remain elevated.Although unemployment returns to normal by 2014, the effect on wages persists in these areas.
DOI: 10.3386/w23843
Authors: Brian Chen, Samuel Hanson, Jeremy Stein
Institutions: National Bureau of Economic Research, Harvard University
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: green
Funder: Harvard Business School
OpenAlex ID: W2607498917