Project Details
Projekt
Real effects of a bank liquidity shock on bank lending decisions and corporate investments
Subject Area
Accounting and Finance
Term
from 2012 to 2018
Project identifier
Deutsche Forschungsgemeinschaft (DFG) - Project number 202579283
The financial crisis during the last years has highlighted the close link between financial market performance and macroeconomic outcomes. The goal of our project is to establish empirically the transmission channel of a liquidity shock for banks and real outcomes. Based on a novel dataset of the Bundesbank on banks' liquidity positions and credit supply as well as detailed financial accounting data of German corporations, we want to examine the following research questions: 1.) How do banks that are affected by the liquidity shock tighten credit standards? Banks can for example tighten credit conditions by increasing the spread of an average loan, increasing collateral requirement or by simply reducing the amount and maturity of loans. 2.) What are the macroeconomic consequences if firms get credit rationed in a developed country like Germany? In how far are firms able to substitute funding? 3.) What role do business-groups play in insuring against external funding shocks? By identifying these research questions we want to contribute to the corporate finance as well as to the macroeconomic literature. Furthermore, our findings should also provide monetary policy makers and financial market regulators a more precise understanding regarding the consequences of their actions.
DFG Programme
Priority Programmes
International Connection
Turkey, United Kingdom, USA
