Bank Liquidity Provision Across the Firm Size Distribution
We use supervisory loan-level data to document that small firms (SMEs) obtain shorter maturity credit lines than large firms; have less active maturity management; post more collateral; have higher utilization rates; and pay higher spreads. We rationalize these facts as the equilibrium outcome of a trade-off between lender commitment and discretion. Using the COVID recession, we test the prediction that SMEs are subject to greater lender discretion by examining credit line utilization. We show that SMEs do not drawdown in contrast to large firms despite SME demand, but that PPP loans helped alleviate the shortfall.
-
-
Copy CitationGabriel Chodorow-Reich, Olivier Darmouni, Stephan Luck, and Matthew C. Plosser, "Bank Liquidity Provision Across the Firm Size Distribution," NBER Working Paper 27945 (2020), https://doi.org/10.3386/w27945.Download Citation
-
Non-Technical Summaries
- In 2019, less than 10 percent of small firms had unsecured revolving credit lines, while more than 80 percent of large firms did...
Published Versions
Gabriel Chodorow-Reich & Olivier Darmouni & Stephan Luck & Matthew Plosser, 2021. "Bank liquidity provision across the firm size distribution," Journal of Financial Economics, . citation courtesy of 
More from the NBER
In addition to working papers, the NBER disseminates affiliates’ latest findings through a range of free periodicals—the NBER Reporter, the NBER Digest, the Bulletin on Health, the Bulletin on the Economics of Alzheimer's, and the Bulletin on Entrepreneurship—as well as research spotlights, lectures, and panel videos.
