Bank Liquidity Pressures and the Availability of Bank Credit to Small Firms: Was the 2007-2009 Credit Crisis Different

摘要

This study focuses on the effects on credit availability of changes in both the availability of, and the need for, bank liquidity. It also examines the extent to which the recent liquidity crisis faced by many banks may have adversely affected the availability of credit to small firms. Bank liquidity concerns arise from both the asset side of the balance sheet, in the form of liquid assets held, and the liability side of the balance sheet, in the form of unused loan commitments that must be met on demand. During the pre-crisis period, a higher liquid assets ratio was associated with a larger increase in total loans, commercial and industrial (C&I) loans, and commercial real estate (CRE) loans as a share of assets. This sensitivity increased during the 2007-2009 financial crisis and persisted immediately following the crisis in 2010. On the other side of bank balance sheets, unused loan commitments tended to stimulate lending, although this effect was weaker during the crisis for CRE commitments on CRE loans.