Trade Uncertainty and U.S. Bank Lending
Working Paper 31860
DOI 10.3386/w31860
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This paper uses U.S. credit register data and the 2018–2019 Trade War to study the effects of uncertainty on domestic credit supply. Exploiting differences in banks’ ex-ante exposure to trade uncertainty, we find that increased uncertainty is associated with a broad lending contraction across their customer firms. This result is consistent with banks responding to uncertainty with wait-and-see behaviors, where more exposed banks curtail risky exposures, reduce loan maturities, and adjust loan supply along both intensive and extensive margins. The lending contraction is larger for more capital-constrained banks and has significant real effects, especially for bank-dependent firms.
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Copy CitationRicardo Correa, Julian di Giovanni, Linda S. Goldberg, and Camelia Minoiu, "Trade Uncertainty and U.S. Bank Lending," NBER Working Paper 31860 (2023), https://doi.org/10.3386/w31860.
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