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The impact of bank recapitalization on firms' access to credit: Evidence from Portugal
During the recent financial crisis the Portuguese banks experienced several private and government capital injections. This paper investigates the impact of bank recapitalizations on the supply of credit in the period between the first quarter of 2010 and the fourth quarter of 2013. The results suggest that bank bailouts contributed to an increase in the supply of credit. This effect is negatively related to the capital buffer of recapitalized banks and applies to the sectors of manufacturing and trade. There is no evidence that bank recapitalizations contributed to a selective behavior in the supply of credit to distressed firms when compared to other firms.
Finantial Stability Article