Paper Title
Bank Lending, Liquidity Shocks And Economic Activity: Evidence From The Syndicated Loan Market In The U.S.
Abstract
This paper provides the evidence on transmission of the banking sector problems to the real sector economic
activity and presents how deterioration of banks’ financial health affects bank lending in the U.S. I exploit the impact of the
composition of banks’ liabilities prior to the financial crisis of 2007-2009 on banks’ lending. In particular, I show that banks,
relying more on core deposit financing, decrease lending to a lesser extent than those banks financed mainly by unstable
sources of funding. Further, I show that a decline in bank lending imposes financial constraints on firms and thereby affects
their real economic activity measured by firms’ stock returns.