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Journal of Finance Vol. 71 No. 3 2016

From Wall Street to Main Street: The Impact of the Financial Crisis on Consumer Credit Supply

Rodney Ramcharan1; Stéphane Verani2,3; SKANDER J. VAN DEN HEUVEL

1 University of Southern California · 2 Federal Reserve · 3 Federal Reserve Board of Governors

open access

Abstract

H ow did the collapse of the asset‐backed securities (ABS) market during the 2007 to 2009 financial crisis affect the supply of credit to the broader economy? Using new data on the U.S. credit union industry, we find that ABS‐related losses are associated with a large contraction in the supply of credit to consumers, especially among those credit unions that began the crisis with weaker capitalization. We also find that this credit supply shock restricted the availability of mortgage and automobile credit. These results show how movements in the prices of financial assets can affect the real economy.

DOI
10.1111/jofi.12209
Volume
71
Issue
3
Pages
1323-1356
Language
en
Sources
openalex bibtex:phds-export.bib crossref

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