American Economic Review Vol. 107 No. 11 2017

The Consumption Effects of the 2007–2008 Financial Crisis: Evidence from Households in Denmark

Thais Lærkholm Jensen¹; Niels Johannesen²

¹ Department of Economics, University of Copenhagen, Øster Farimagsgade 5, DK-1353 Copenhagen K, and National Bank of Denmark (email: ) · ² Department of Economics and CEBI, University of Copenhagen, Øster Farimagsgade 5, DK-1353 Copenhagen K (email: )

Abstract

Did the financial crisis in 2007–2008 spread from distressed banks to households through a contraction of the credit supply? We study this question with a dataset that contains observations on all accounts in Danish banks as well as comprehensive information about individual account holders and banks. We document that banks exposed to the financial crisis reduced their lending relative to nonexposed banks, which in turn caused a significant decrease in the borrowing and spending of their customers. The effects were persistent: borrowing remained lower through the postcrisis years and spending foregone during the crisis was not recovered.

DOI

10.1257/aer.20151497

Volume

107

Issue

11

Pages

3386-3414

Language

en

Sources

bibtex:phds-export.bib openalex crossref

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