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Bank Lending Standards and Access to Lines of Credit

Author

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  • CEM DEMIROGLU
  • CHRISTOPHER JAMES
  • ATAY KIZILASLAN
Abstract
This paper examines how changes in bank lending standards are related to the availability of bank lines of credit for private and comparable public firms. Overall, we find that access to lines of credit is more contingent on bank lending standards for private than for public firms. The impact of bank lending standards is however asymmetric: while private firms are less likely than public firms to gain access to new lines when credit market conditions are tight, we find no difference between public and private firms in terms of their use or retention of pre‐existing lines. We also find that private firms without lines of credit use more trade credit when bank lending standards are tight, which is suggestive of a supply effect. Overall, the evidence suggests that “credit crunches” are likely to have a disproportionate impact on private firms. However, pre‐existing banking relationships appear to mitigate the impact of these contractions on private firms.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Cem Demiroglu & Christopher James & Atay Kizilaslan, 2012. "Bank Lending Standards and Access to Lines of Credit," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 44(6), pages 1063-1089, September.
    • Handle: RePEc:mcb:jmoncb:v:44:y:2012:i:6:p:1063-1089
    DOI: j.1538-4616.2012.00523.x
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