José-Luis PEYDRÓ
Barcelona Graduate School of Economics, N/A, Research Professor and Barcelona Banking Summer School Director
Peydró is ICREA Professor at UPF and CREI, Research Professor at Barcelona GSE, CEPR Research Fellow, Bundesbank Research Professor, CEMFI Research Fellow, advisor of Bank of Spain, consultant in several central banks, and independent board member at Institut Català de les Finances (ICF). He was member of the advisory scientific committee at the European Systemic Risk Board and held visiting positions at Banque de France, Becker Friedman Institute at Chicago University, MIT-Sloan, IMF and World Bank. Peydró is recipient of a European Research Council Consolidator grant (@persistdebt), a European Central Bank Wim Duisenberg Fellowship, a senior Houblon-Norman Fellowship (Bank of England), three MINECO grants and a Fundación BBVA grant. Peydró teaches at Barcelona GSE and Imperial College. As of December 2020, Peydró is number 4 in the world in research impact for economists who finished their PhD in 2005 and number 1 over the last 10 years for Spanish economists (in Spain or abroad) based on Research Papers in Economics (RePEc) data.
Peydró specializes in Finance and Macroeconomics, mainly on systemic risk, financial crises, endogenous risk, central bank policies, monetary and prudential policy, financial globalization, financial contagion, financial innovation, macroeconomics and credit markets, banking, fintech, capital and liquidity. He is also working on the effects of financial distress on households' welfare. His research has been published in the top-5 journals in economics: Econometrica (lead article), American Economic Review and Journal of Political Economy, and in the top-3 journals on finance (Review of Financial Studies, Journal of Finance, and Journal of Financial Economics). He has also co-written the book Systemic Risk, Crises and Macroprudential Policy (MIT Press, 2015) and several book chapters such as in the Oxford Handbook of Banking (OUP, 2009) or in Finance and Investment: The European Case, (OUP, 2018).
Address: Universitat Pompeu Fabra
Dept. of Economics and Business
carrer Ramon Trias Fargas 25
08005 Barcelona
Peydró specializes in Finance and Macroeconomics, mainly on systemic risk, financial crises, endogenous risk, central bank policies, monetary and prudential policy, financial globalization, financial contagion, financial innovation, macroeconomics and credit markets, banking, fintech, capital and liquidity. He is also working on the effects of financial distress on households' welfare. His research has been published in the top-5 journals in economics: Econometrica (lead article), American Economic Review and Journal of Political Economy, and in the top-3 journals on finance (Review of Financial Studies, Journal of Finance, and Journal of Financial Economics). He has also co-written the book Systemic Risk, Crises and Macroprudential Policy (MIT Press, 2015) and several book chapters such as in the Oxford Handbook of Banking (OUP, 2009) or in Finance and Investment: The European Case, (OUP, 2018).
Address: Universitat Pompeu Fabra
Dept. of Economics and Business
carrer Ramon Trias Fargas 25
08005 Barcelona
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Papers by José-Luis PEYDRÓ
Do financial crises radicalize voters? We study Germany's 1931 banking crisis, collecting new data on bank branches and firm-bank connections of over 5,500 firms. Exploiting cross-sectional variation in pre-crisis exposure to failing banks, we show that Nazi votes surged in locations more affected by the financial crisis. Radicalization in response to the shock was exacerbated in cities with a history of anti-Semitism. After the Nazis seized power, both pogroms and deportations were more frequent in places affected by the banking crisis. Our results suggest an important synergy between financial distress and cultural predispositions, with far-reaching consequences.
The paper empirically studies the effect of the ECB's introduction of negative monetary policy rates on the behaviour of Italian banks and firms. In particular, the paper quantifies the consequences for the credit supply of reducing the rate on the deposit facility to -0.1 per cent and, more broadly, on the real economy, stressing the role of bank liquidity on which negative rates had the most direct impact. Negative monetary policy rates compressed the yields on more liquid financial assets, inducing banks to rebalance their portfolios towards loans to firms. The expansion in credit supply occurred through both lower interest rates on loans and larger loans being granted, benefiting in particular riskier and smaller firms. Easier access to credit had a positive impact on investment and wages.
markets.
Previously circulated as 'International Financial Integration, Crises and Monetary Policy: Evidence from the Euro Area Interbank Crises'.
This is an open access article under the terms of the Creative Commons Attribution License (https://creativecommons.org/licenses/by/4.0/) which permits use, distribution and reproduction in any medium, provided the original work is properly cited.
fixed-effects, and shocks to capital requirements arising from surprise features of the U.S. implementation of Basel III. We find that less-capitalized banks reduce loan retention, particularly among loans with higher capital requirements and at times when capital is scarce, and nonbanks step in. This reallocation has important spillovers: during the 2008 crisis, loans funded by nonbanks with fragile liabilities are less likely to be rolled over and experience greater price volatility.
Review of Financial Studies (2021), 34(5), 2181-2235.
DOI: https://doi.org/10.1093/rfs/hhaa106
This is an Open Access article distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted reuse, distribution, and reproduction in any medium, provided the original work is properly cited.
This is the authors’ original version. The version of record [Anticipating the Financial Crisis: Evidence from Insider Trading in Banks, Ozlem Akin, José M. Marín and José-Luis Peydró, Economic Policy, 2020, 35(102), 213-267] is available online at https://academic.oup.com/economicpolicy/article-abstract/doi/10.1093/epolic/eiaa012/5862015?redirectedFrom=fulltext
DOI: https://doi.org/10.1093/epolic/eiaa012
of credit supply (Bernanke 1983). Moreover, banking crises —importantly— are not random phenomena, but come after periods of very strong bank credit growth (Kindleberger 1978; Schularick and Taylor 2012; Gourinchas and Obstfeld 2012; Bordo and Meissner 2012).
NBER Macroeconomics Annual 2012, Volume 27, edited by Daron Acemoglu, Jonathan Parker & Michael Woodford, http://papers.nber.org/books/acem12-2
Comment available from Universitat Pompeu Fabra's e-repository: http://hdl.handle.net/10230/43790
is the provision of credit to fund private investment and consumption. In a crisis, a credit reduction may be the result itself of the grim economic outlook, via weaker credit demand and net worth of firms and households. However, credit may also decline from a reduction of credit supply due to banks’ capital and liquidity problems.
Available from:
https://www.ijcb.org/journal/ijcb10q4a3.pdf
http://hdl.handle.net/10230/43806
This is a preprint. The published version [‘Monetary Policy, Risk-Taking and Pricing: Evidence from a Quasi-Natural Experiment’, Vasso Ioannidou, Steven Ongena, José-Luis Peydró, Review of Finance, March 2015, 19(1), 95-144] is available online at: https://www.sciencedirect.com/science/article/abs/pii/S002219961000019X?via%3Dihub; DOI: https://doi.org/10.1016/j.jinteco.2010.02.002
Also available on the ECB Working Paper Series No. 1216 (https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1216.pdf)
The version of record [Interbank Contagion at Work: Evidence from a Natural Experiment, Rajkamal Iyer and José-Luis Peydró, The Review of Financial Studies, August 2011, 24(4), 1337-1377] is available online at https://academic.oup.com/rfs/article-abstract/24/4/1337/1578693; DOI: https://doi.org/10.1093/rfs/hhp105
Also available on the ECB Working Paper Series No. 1147 (https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1147.pdf)
The version of record [Bank Risk-taking, Securitization, Supervision, and Low Interest Rates: Evidence from the Euro-area and the U.S. Lending Standards, Angela Maddaloni and José-Luis Peydró, The Review of Financial Studies, June 2011, 24(6), 2121-2165] is available online at https://academic.oup.com/rfs/article-abstract/24/6/2121/1587432; DOI: https://doi.org/10.1093/rfs/hhr015
Also available as a European Central Bank Working Paper no. 1248 (https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1248.pdf)
The published version [‘Credit Supply and Monetary Policy: Identifying the Bank Balance-Sheet Channel with Loan Applications’, Gabriel Jiménez, Steven Ongena, José-Luis Peydró, Jesús Saurina, American Economic Review, August 2012, 102(5), 2301-2326] is available online at: https://www.aeaweb.org/articles?id=10.1257/aer.102.5.2301
DOI: 10.1257/aer.102.5.2301
Other versions: European Central Bank Working Paper no. 1179 (https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1179.pdf) and Universitat Pompeu Fabra's e-repository (http://hdl.handle.net/10230/43180)
Our results suggest that the bank-lending channel has been partly mitigated by the ECB nonstandard monetary policy interventions. At the same time, when looking at the transmission through banks of different sizes, it seems that, until the end of 2011, the impact of credit frictions of borrowers have not been significantly reduced, especially in distressed countries. Since small banks tend to lend primarily to SME, we infer that the policies adopted until the end of 2011 might have fall short of reducing credit availability problems stemming from deteriorated firm net worth and risk conditions, especially for small firms in countries under stress.
The version of record [Heterogeneous transmission mechanism: Monetary policy and financial fragility in the Eurozone, Matteo Ciccarelli, Angela Maddaloni and José-Luis Peydró, Economic Policy, July 2013, 28(75), 459-512] is available online at https://academic.oup.com/economicpolicy/article-abstract/28/75/459/2918408?redirectedFrom=fulltext; DOI: https://doi.org/10.1111/1468-0327.12015
A working paper is available from the European Central Bank Working Paper no. 1527: https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1527.pdf
This is a preprint from February 2010.
‘Financial Regulation, Financial Globalization, and the Synchronization of Economic Activity’, Sebnem Kalemli-Ozcan, Elias Papaioannou, José-Luis Peydró, The Journal of Finance, 68(3), 1179-1228, 2013, has been published in final form at https://doi.org/10.1111/jofi.12025
It is also available as an ECB Working Paper No. 1221 (https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1221.pdf) and at Universitat Pompeu Fabra's e-repository (http://hdl.handle.net/10230/43264)
The version of record [Interbank Liquidity Crunch and the Firm Credit Crunch: Evidence from the 2007–2009 Crisis, Rajkamal Iyer, José-Luis Peydró, Samuel da-Rocha-Lopes, Antoinette Schoar, The Review of Financial Studies, January 2014, 78(1), 347-372] is available online at https://academic.oup.com/rfs/article-abstract/27/1/347/1573768?redirectedFrom=fulltext; DOI: https://doi.org/10.1093/rfs/hht056
Another version is available at Universitat Pompeu Fabra's e-repository (http://hdl.handle.net/10230/36226)
Do financial crises radicalize voters? We study Germany's 1931 banking crisis, collecting new data on bank branches and firm-bank connections of over 5,500 firms. Exploiting cross-sectional variation in pre-crisis exposure to failing banks, we show that Nazi votes surged in locations more affected by the financial crisis. Radicalization in response to the shock was exacerbated in cities with a history of anti-Semitism. After the Nazis seized power, both pogroms and deportations were more frequent in places affected by the banking crisis. Our results suggest an important synergy between financial distress and cultural predispositions, with far-reaching consequences.
The paper empirically studies the effect of the ECB's introduction of negative monetary policy rates on the behaviour of Italian banks and firms. In particular, the paper quantifies the consequences for the credit supply of reducing the rate on the deposit facility to -0.1 per cent and, more broadly, on the real economy, stressing the role of bank liquidity on which negative rates had the most direct impact. Negative monetary policy rates compressed the yields on more liquid financial assets, inducing banks to rebalance their portfolios towards loans to firms. The expansion in credit supply occurred through both lower interest rates on loans and larger loans being granted, benefiting in particular riskier and smaller firms. Easier access to credit had a positive impact on investment and wages.
markets.
Previously circulated as 'International Financial Integration, Crises and Monetary Policy: Evidence from the Euro Area Interbank Crises'.
This is an open access article under the terms of the Creative Commons Attribution License (https://creativecommons.org/licenses/by/4.0/) which permits use, distribution and reproduction in any medium, provided the original work is properly cited.
fixed-effects, and shocks to capital requirements arising from surprise features of the U.S. implementation of Basel III. We find that less-capitalized banks reduce loan retention, particularly among loans with higher capital requirements and at times when capital is scarce, and nonbanks step in. This reallocation has important spillovers: during the 2008 crisis, loans funded by nonbanks with fragile liabilities are less likely to be rolled over and experience greater price volatility.
Review of Financial Studies (2021), 34(5), 2181-2235.
DOI: https://doi.org/10.1093/rfs/hhaa106
This is an Open Access article distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted reuse, distribution, and reproduction in any medium, provided the original work is properly cited.
This is the authors’ original version. The version of record [Anticipating the Financial Crisis: Evidence from Insider Trading in Banks, Ozlem Akin, José M. Marín and José-Luis Peydró, Economic Policy, 2020, 35(102), 213-267] is available online at https://academic.oup.com/economicpolicy/article-abstract/doi/10.1093/epolic/eiaa012/5862015?redirectedFrom=fulltext
DOI: https://doi.org/10.1093/epolic/eiaa012
of credit supply (Bernanke 1983). Moreover, banking crises —importantly— are not random phenomena, but come after periods of very strong bank credit growth (Kindleberger 1978; Schularick and Taylor 2012; Gourinchas and Obstfeld 2012; Bordo and Meissner 2012).
NBER Macroeconomics Annual 2012, Volume 27, edited by Daron Acemoglu, Jonathan Parker & Michael Woodford, http://papers.nber.org/books/acem12-2
Comment available from Universitat Pompeu Fabra's e-repository: http://hdl.handle.net/10230/43790
is the provision of credit to fund private investment and consumption. In a crisis, a credit reduction may be the result itself of the grim economic outlook, via weaker credit demand and net worth of firms and households. However, credit may also decline from a reduction of credit supply due to banks’ capital and liquidity problems.
Available from:
https://www.ijcb.org/journal/ijcb10q4a3.pdf
http://hdl.handle.net/10230/43806
This is a preprint. The published version [‘Monetary Policy, Risk-Taking and Pricing: Evidence from a Quasi-Natural Experiment’, Vasso Ioannidou, Steven Ongena, José-Luis Peydró, Review of Finance, March 2015, 19(1), 95-144] is available online at: https://www.sciencedirect.com/science/article/abs/pii/S002219961000019X?via%3Dihub; DOI: https://doi.org/10.1016/j.jinteco.2010.02.002
Also available on the ECB Working Paper Series No. 1216 (https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1216.pdf)
The version of record [Interbank Contagion at Work: Evidence from a Natural Experiment, Rajkamal Iyer and José-Luis Peydró, The Review of Financial Studies, August 2011, 24(4), 1337-1377] is available online at https://academic.oup.com/rfs/article-abstract/24/4/1337/1578693; DOI: https://doi.org/10.1093/rfs/hhp105
Also available on the ECB Working Paper Series No. 1147 (https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1147.pdf)
The version of record [Bank Risk-taking, Securitization, Supervision, and Low Interest Rates: Evidence from the Euro-area and the U.S. Lending Standards, Angela Maddaloni and José-Luis Peydró, The Review of Financial Studies, June 2011, 24(6), 2121-2165] is available online at https://academic.oup.com/rfs/article-abstract/24/6/2121/1587432; DOI: https://doi.org/10.1093/rfs/hhr015
Also available as a European Central Bank Working Paper no. 1248 (https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1248.pdf)
The published version [‘Credit Supply and Monetary Policy: Identifying the Bank Balance-Sheet Channel with Loan Applications’, Gabriel Jiménez, Steven Ongena, José-Luis Peydró, Jesús Saurina, American Economic Review, August 2012, 102(5), 2301-2326] is available online at: https://www.aeaweb.org/articles?id=10.1257/aer.102.5.2301
DOI: 10.1257/aer.102.5.2301
Other versions: European Central Bank Working Paper no. 1179 (https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1179.pdf) and Universitat Pompeu Fabra's e-repository (http://hdl.handle.net/10230/43180)
Our results suggest that the bank-lending channel has been partly mitigated by the ECB nonstandard monetary policy interventions. At the same time, when looking at the transmission through banks of different sizes, it seems that, until the end of 2011, the impact of credit frictions of borrowers have not been significantly reduced, especially in distressed countries. Since small banks tend to lend primarily to SME, we infer that the policies adopted until the end of 2011 might have fall short of reducing credit availability problems stemming from deteriorated firm net worth and risk conditions, especially for small firms in countries under stress.
The version of record [Heterogeneous transmission mechanism: Monetary policy and financial fragility in the Eurozone, Matteo Ciccarelli, Angela Maddaloni and José-Luis Peydró, Economic Policy, July 2013, 28(75), 459-512] is available online at https://academic.oup.com/economicpolicy/article-abstract/28/75/459/2918408?redirectedFrom=fulltext; DOI: https://doi.org/10.1111/1468-0327.12015
A working paper is available from the European Central Bank Working Paper no. 1527: https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1527.pdf
This is a preprint from February 2010.
‘Financial Regulation, Financial Globalization, and the Synchronization of Economic Activity’, Sebnem Kalemli-Ozcan, Elias Papaioannou, José-Luis Peydró, The Journal of Finance, 68(3), 1179-1228, 2013, has been published in final form at https://doi.org/10.1111/jofi.12025
It is also available as an ECB Working Paper No. 1221 (https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1221.pdf) and at Universitat Pompeu Fabra's e-repository (http://hdl.handle.net/10230/43264)
The version of record [Interbank Liquidity Crunch and the Firm Credit Crunch: Evidence from the 2007–2009 Crisis, Rajkamal Iyer, José-Luis Peydró, Samuel da-Rocha-Lopes, Antoinette Schoar, The Review of Financial Studies, January 2014, 78(1), 347-372] is available online at https://academic.oup.com/rfs/article-abstract/27/1/347/1573768?redirectedFrom=fulltext; DOI: https://doi.org/10.1093/rfs/hht056
Another version is available at Universitat Pompeu Fabra's e-repository (http://hdl.handle.net/10230/36226)
Chapter summary:
¿Qué sabemos de la COVID-19 hasta ahora? ¿Qué pueden enseñarnos sobre el virus otras epidemias pasadas? ¿Qué nos enseña la economía del comportamiento sobre cómo reaccionamos los humanos ante este tipo de shocks? ¿Ha sido efectivo el confinamiento para combatir la pandemia? ¿Qué duración y dimensiones tendrá la crisis económica? ¿Cuál será su impacto sobre el empleo? ¿Y su efecto sobre la desigualdad? ¿Cómo afectará a las desigualdades de género y a las desigualdades educativas? ¿Qué políticas se han aplicado hasta el momento para combatirla y cuáles se deberían implementar? ¿Cómo podemos evitar una nueva crisis de deuda y qué papel debe jugar la Unión Europea en este momento crítico?
https://doi.org/10.1093/oxfordhb/9780199640935.013.0025
The domino-style structure in which the financial system exists is a perilous one. Although historically, the financial system has been able to deal with major shocks, the fact remains that our financial system is not as secure as it should be. Recent years have brought about too many examples of contagion and systemic risk. That is why Financial Contagion is such an important read. In it, the serious concerns that revolve around our fragile economic system are investigated, researched, and explained.
Throughout the book, Kolb offers valuable insights on this dilemma as he compiles the history of financial contagion, highlights the latest research on systemic failure and interrelated markets, and analyzes the risks and consequences we face moving forward.
Examines the importance of careful regulation and what must be done to stabilize the global financial system:
Includes contributed chapters from both academics and experienced professionals, offering a variety of perspectives and a rich interplay of ideas
Details how close we are to witnessing a financial contagion that could devastate the world economy
We have been harshly reminded of how fragile our economic ecosystem is. With Financial Contagion, you'll hold a better understanding of what needs to be done to strengthen our system and safeguard our financial future.
https://doi.org/10.1002/9781118267646.ch36
https://doi.org/10.4324/9781315796918
https://voxeu.org/content/first-global-financial-crisis-21st-century
https://voxeu.org/article/impact-short-term-interest-rates-risk-taking-hard-evidence
http://voxeu.org/epubs/cepr-reports/future-banking
https://voxeu.org/article/loose-monetary-policy-and-excessive-credit-and-liquidity-risk-taking-banks
http://voxeu.org/content/eurozone-crisis-consensus-view-causes-and-few-possible-solutions
http://www.voxeu.org/article/five-years-crisis-resolution-some-lessons
http://dx.doi.org/10.7551/mitpress/9780262028691.001.0001
Chapter abstract: Since the beginning of the financial crisis, academics and regulators on both sides of the Atlantic have started to debate the implications of securities trading by banks. New regulation limits security trading, fearing that this could crowd out lending to the real economy or could facilitate risk-shifting by financial institutions. On the other hand, banks may use security trading for hedging purposes or, particularly during a crisis, to access public liquidity. Only very recently have researchers begun to have access to micro data at the security level on banks’ trading activities, and they are starting to bring robust evidence on these issues. This chapter reviews the potential costs and benefits of combining traditional intermediation activity with security trading and discusses the recent empirical evidence.
This paper studies the role of collateral in credit markets under stress. Australian interbank markets at the time of the Lehman Brothers failure present a platform for identification, because the collateral is liquid and homogenous across borrowers (unlike in retail credit markets), the shock is large and exogenous (unlike in countries with bank failures), and there is comprehensive administrative collateralised and uncollateralised loan-level data. After the exogenous shock, collateralised and uncollateralised borrowing compositions diverge. Uncollateralised borrowing declines for ex ante riskier borrowers while collateralised borrowing increases for borrowers ex ante holding more high-quality collateral. Moreover, riskier banks with sufficient high-quality collateral substitute from uncollateralised to collateralised borrowing. In aggregate, collateralised borrowing expands substantially, predominantly collateralised against second-best (but still high quality) collateral, while interest rates on loans against first-best collateral fall substantially, indicating scarcity of the most-liquid safe assets. This liquid asset demand encourages collateralised lending, contrary to cash hoarding.
margin for general-interest newspapers and on the intensive margin for financial newspapers. Regarding the Eurozone crisis we find that newspapers connected to banks more exposed to stressed sovereign bonds are more likely to promote a narrative of the crisis favorable to banks and to oppose debt-restructuring measures detrimental to creditors. Our findings support the concern that financial distress and increased dependence on creditors may undermine media companies’ editorial independence.
This paper shows how the creation of ceilings on local public debt can increase economic activity. For identification, the paper exploits administrative micro data in conjunction with the introduction of a Mexican law limiting the amount of indebtedness of subnational governments. The analysis finds that states with ex-ante higher public debt have stronger economic growth after the implementation of the law, despite reducing public spending and increasing taxes, albeit at the expense of more extreme poverty. The mechanism for this result is a reduction in crowding out. In states with higher ex-ante public debt, banks reallocate credit away from local governments and into private firms, with strong positive firm-level real effects. The unwinding of this crowding out is stronger for more credit constrained firms and for firms borrowing from banks that are more exposed to local public debt. Furthermore, the impact of the law on economic growth is stronger in states allocating a larger share of public spending to non-infrastructure projects.
We show that lender of the last resort (LOLR) policy contributes to higher bank interconnectedness and associated systemic risk. Using novel micro-level data, we analyze the haircut gap channel of LOLR--the difference between the private market and central bank haircuts. LOLR increases interconnectedness by incentivizing banks to pledge higher haircut gap bonds, especially issued by similar banks and by systemically important banks. LOLR also exacerbates cross-pledging of bank bonds. Higher haircut gaps only incentivize banks, not other intermediaries without LOLR access, to increase bank bond holdings. Finally, LOLR revives bank bond issuance associated with higher haircut gaps.
different parts within the bank). Second, shorter loan origination time is associated with higher ex-post defaults at the loan-level, and aggregated at the bank-level, with higher likelihood of bank failure or other strong bank distress events, overall consistent with lower screening (time).
also weak. For identification, we exploit an administrative dataset of loan applications matched with bank and firm variables covering Spain from 2002 to 2010. Bank balance-sheet strength determines the granting of loan applications only in crisis times, while firm balance-sheet strength – notably leverage – determines strongly this granting in both good and crisis times. Our findings underscore the importance of the strength of corporate balance sheets over credit supply for credit availability.
Overall, our results provide evidence on the existence of significant adverse selection problems in credit markets.
For identification, we exploit administrative Dutch tax-return and property data linked
to the universe of housing transactions, and an introduction of loan-to-value regula-
tion. The regulation reduces overall household leverage, with bunching in its limit. Ex-
ante more-affected households substantially reduce leverage and debt servicing costs.
Rather than buying cheaper homes or taking lightly-regulated loans, households con-
sume greater liquidity to satisfy the regulation. Improvements in household solvency
result in less financial distress and, given negative idiosyncratic shocks, better liquidity
management. However, fewer households transition from renting into ownership. These
effects are stronger among liquidity-constrained households.