Scandinavian Working Papers in Economics
Working Paper Series,
Sveriges Riksbank (Central Bank of Sweden)
No 281: Lines of Credit and Investment: Firm-Level Evidence of Real Effects of the Financial Crisis
Karolina Holmberg ()
Additional contact information
Karolina Holmberg: Monetary Policy Department, Central Bank of Sweden, Postal: Sveriges Riksbank, SE-103 37 Stockholm, Sweden
Abstract: Using Swedish bank lending data, investment data and accounting data, I examine how the financial crisis affected corporate investment through its effect on credit availability. Sensitivity to a credit supply shock is measured as credit reserves, defined as unused credit on lines of credit. I find that firms with low credit reserves reduced investment significantly more than other firms. However, it is not possible to determine that this relationship was caused by a shift in the supply of credit. Overall, I find no statistically strong evidence that the decline in investment was exacerbated by a contraction in credit supply.
Keywords: Corporate investment; Crisis; Financial Markets and the Macroeconomy; Lines of Credit
JEL-codes: E22; E44; G01; G31; G32
38 pages, November 1, 2013
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rap_wp281_131118.pdf
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