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Article: Credit Environment and Small Business Dynamics: Evidence from Establishment-Level Data

TitleCredit Environment and Small Business Dynamics: Evidence from Establishment-Level Data
Authors
Issue Date2022
Citation
The Review of Corporate Finance Studies, 2022, Forthcoming How to Cite?
AbstractWe evaluate how a positive, technology-driven shock to bank liquidity affects small business dynamics across different size distributions. We first show that banks receiving positive liquidity shocks increase lending to relatively larger SMEs, not to the smallest firms. This finding is consistent with the view that a positive liquidity shock enhances bank charter values, thereby reducing risk-taking incentives. Moreover, such disproportionate credit allocation leads to a crowding-out effect on micro firms. When larger SMEs grow faster and exit less because of better access to credit, their expansion stifles the development of micro firms, whose access to credit remains unchanged.
Persistent Identifierhttp://hdl.handle.net/10722/322974

 

DC FieldValueLanguage
dc.contributor.authorLin, C-
dc.contributor.authorTai, M-
dc.contributor.authorXie, W-
dc.date.accessioned2022-11-18T11:46:03Z-
dc.date.available2022-11-18T11:46:03Z-
dc.date.issued2022-
dc.identifier.citationThe Review of Corporate Finance Studies, 2022, Forthcoming-
dc.identifier.urihttp://hdl.handle.net/10722/322974-
dc.description.abstractWe evaluate how a positive, technology-driven shock to bank liquidity affects small business dynamics across different size distributions. We first show that banks receiving positive liquidity shocks increase lending to relatively larger SMEs, not to the smallest firms. This finding is consistent with the view that a positive liquidity shock enhances bank charter values, thereby reducing risk-taking incentives. Moreover, such disproportionate credit allocation leads to a crowding-out effect on micro firms. When larger SMEs grow faster and exit less because of better access to credit, their expansion stifles the development of micro firms, whose access to credit remains unchanged.-
dc.languageeng-
dc.relation.ispartofThe Review of Corporate Finance Studies-
dc.titleCredit Environment and Small Business Dynamics: Evidence from Establishment-Level Data-
dc.typeArticle-
dc.identifier.emailLin, C: chenlin1@hku.hk-
dc.identifier.emailTai, M: taimzh@hku.hk-
dc.identifier.authorityLin, C=rp01808-
dc.identifier.authorityTai, M=rp02295-
dc.identifier.doi10.1093/rcfs/cfac037-
dc.identifier.hkuros342478-
dc.identifier.volumeForthcoming-

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