Credit Misallocation During the European Financial Crisis

Bibliographic Data

ID9717092
AuthorsFabiano Schivardi (0000-0001-7708-1011, LUISS University, EIEF & CEPR, Italy, corresponding author), Enrico Sette (Bank of Italy), Guido Tabellini (0000-0002-2272-4638, Bocconi University, CEPR & CES-Ifo, Italy)
Year2022
Volume132
Issue641
Pages391-423
Publication date2022-01-07
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueThe Economic Journal (JOURNAL)
Journal identifiersISSN: 0013-0133 • E-ISSN: 1468-0297
PublisherOxford University Press (PUBLISHER • GB)
DOI10.1093/ej/ueab039
OpenAlexW3157243315
LanguageEN
Citations received5
References cited30

Using data on bank-firm relationships in Italy during the Eurozone financial crisis, we show that: (i) compared to healthy banks, under-capitalised banks cut credit to healthy but not to zombie firms and are more likely to prolong a credit relationship with a zombie; (ii) in area sectors with more low-capital banks, zombies are more likely to survive; (iii) bank under-capitalisation does not hurt the growth rate of healthy firms. We provide evidence that extending credit to the weakest firms during the recession mitigated the disruption of supply chains and adverse local demand externalities

Bank credit · Business · Credit crunch · Economics · Externality · Financial crisis · Financial system · Macroeconomics · Monetary economics · Recession · Zombie · Banking stability, regulation, efficiency · Global Financial Crisis and Policies · Italy: Economic History and Contemporary Issues

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