Bank Liquidity Provision Across the Firm Size Distribution

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...

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Veröffentlicht in:NBER Working Paper Series 2020-10
Hauptverfasser: Chodorow-Reich, Gabriel, Darmouni, Olivier, Luck, Stephan, Plosser, Matthew C
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Sprache:eng
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Corporate Finance
Economic Fluctuations and Growth
Economic theory
Lines of credit
Monetary Economics
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creator Chodorow-Reich, Gabriel
Darmouni, Olivier
Luck, Stephan
Plosser, Matthew C
description 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.
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subjects Corporate Finance
Economic Fluctuations and Growth
Economic theory
Lines of credit
Monetary Economics
title Bank Liquidity Provision Across the Firm Size Distribution
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