Daniel will present his paper, ‘The Credit Line Channel’ in-person at Rouss and Robertson Hall Room 305. The paper is attached and the abstract appears below.

The seminar can also be attended virtually at the following Zoom Link:
https://www.commerce.virginia.edu/CIFM-seminar

The Credit Line Channel

Abstract:

Aggregate U.S. bank lending to firms expands following several adverse macroeconomic shocks, such as the outbreak of COVID-19 or a monetary policy tightening. Using loan-level supervisory data, we show that these dynamics are driven by draws on credit lines by large firms. Banks that experience larger drawdowns during the COVID-19 crisis restrict term lending more, crowding out credit to smaller firms. A structural model indicates that credit lines are central to reproducing this flow of credit toward less constrained firms. While credit lines increase total credit growth in bad times, their redistributive effects can exacerbate the fall in investment.

Paper: Click Here