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The Home Bias and the Credit Crunch: A Regional Perspective
Author(s) -
PRESBITERO ANDREA F.,
UDELL GREGORY F.,
ZAZZARO ALBERTO
Publication year - 2014
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/jmcb.12078
Subject(s) - credit crunch , crunch , business , loan , financial crisis , sample (material) , perspective (graphical) , financial system , quality (philosophy) , monetary economics , finance , economics , medicine , artificial intelligence , computer science , physical therapy , philosophy , chemistry , chromatography , epistemology , macroeconomics
Using detailed data on loan applications and decisions for a large sample of manufacturing firms in Italy during the recent financial crisis, we find that the credit crunch has been harsher in provinces with a large share of branches owned by distantly managed banks. Inconsistent with a flight to quality we do not find evidence that economically weaker firms suffered more during the crisis. In contrast, we find that financially healthier firms were affected more in functionally distant credit markets than in markets populated by less distant banks, consistent with a home bias on the part of nationwide banks.