The Effects of Changes in Local Bank Health on Household Consumption
The Review of Economics and Statistics
2021
This study investigates the relationship between credit availability and household consumption using a novel approach to separate credit demand and supply. We find that a deterioration in local-bank health reduces household consumption, with the strongest effects occurring for households that are more likely to need credit—especially those experiencing a negative income shock and having limited liquid assets. The main contributions of the study are the use of an arguably exogenous measure of local-bank health and multifaceted indicators of constrained households. Our findings contribute to the discussion of the linkages between the financial sector and real economic activity.
- DOI
- 10.1162/rest_a_00914
- Pages
- 1-14
- Language
- en
- Export
- BibTeX
- Sources
- crossref openalex