Relationship Lending and the Great Depression /
Cohen, Jon.
Relationship Lending and the Great Depression / Jon Cohen, Kinda Cheryl Hachem, Gary Richardson. - Cambridge, Mass. National Bureau of Economic Research 2016. - 1 online resource: illustrations (black and white); - NBER working paper series no. w22891 . - Working Paper Series (National Bureau of Economic Research) no. w22891. .
December 2016.
The collapse of long-term lending relationships amplified the Great Depression. We demonstrate this by developing a new measure of lending relationships that can be calculated from widely available data at any level of aggregation. Our approach exploits differences in the responsiveness of loan rates to bank funding costs and is supported by historical evidence and theoretical arguments. The new measure reveals that the marginal impact of bank suspensions on economic activity was higher in more relationship-intensive areas, providing the first formal evidence that relationship lending propagated the real effects of banking sector distress in the early 1930s.
System requirements: Adobe [Acrobat] Reader required for PDF files.
Mode of access: World Wide Web.
Relationship Lending and the Great Depression / Jon Cohen, Kinda Cheryl Hachem, Gary Richardson. - Cambridge, Mass. National Bureau of Economic Research 2016. - 1 online resource: illustrations (black and white); - NBER working paper series no. w22891 . - Working Paper Series (National Bureau of Economic Research) no. w22891. .
December 2016.
The collapse of long-term lending relationships amplified the Great Depression. We demonstrate this by developing a new measure of lending relationships that can be calculated from widely available data at any level of aggregation. Our approach exploits differences in the responsiveness of loan rates to bank funding costs and is supported by historical evidence and theoretical arguments. The new measure reveals that the marginal impact of bank suspensions on economic activity was higher in more relationship-intensive areas, providing the first formal evidence that relationship lending propagated the real effects of banking sector distress in the early 1930s.
System requirements: Adobe [Acrobat] Reader required for PDF files.
Mode of access: World Wide Web.