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Credit Rationing and Credit View: Empirical Evidence from an Ethical Bank in Italy
Author(s) -
BECCHETTI LEONARDO,
GARCIA MARIA MELODY,
TROVATO GIOVANNI
Publication year - 2011
Publication title -
journal of money, credit and banking
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.763
H-Index - 108
eISSN - 1538-4616
pISSN - 0022-2879
DOI - 10.1111/j.1538-4616.2011.00423.x
Subject(s) - credit rationing , rationing , credit history , credit reference , economics , empirical evidence , observational equivalence , actuarial science , credit card interest , empirical research , monetary economics , bank credit , financial system , business , interest rate , econometrics , credit risk , economic growth , statistics , health care , philosophy , epistemology , mathematics
Attempts have been made in the empirical literature to identify credit rationing and its determinants using balance sheet data or evidence from corporate surveys. However, observational equivalence, identification problems, and interview biases are serious problems in these studies. We analyze directly the determinants of credit rationing in credit files by examining the difference between the amounts demanded by and supplied to each borrower, as shown by official bank records. Our findings provide microeconomic evidence that supports the credit view hypothesis by showing that the European Central Bank refinancing rate is significantly and positively related to partial (but not total) credit rationing. This finding is consistent with the hypothesis that this variable affects the total volume of bank loans.