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Real effects of imperfect bank-firm matching

Serafeim Tsoukas
Enrico Sette
Sotirios Kokas
Publication Year 
JEL Code 
E22 - Capital; Investment (including Inventories); Capacity
E51 - Money Supply; Credit; Money Multipliers
G21 - Banks; Other Depository Institutions; Mortgages
G30 - General
Using granular bank-firm level credit data, we show that the characteristics of bank-firm matches affect firms’ access to credit and real outcomes during crises. We identify a set of potential matches in pre-crisis years, and we use them to predict match formation in crisis times. We generate a measure of “imperfect matches" given by the difference between realized and predicted matches. In crisis times, imperfect matches deteriorate firm outcomes. The effects are economically important. A one standard deviation worsening in the index is associated with a drop in firms’ employment, tangible assets, and survival by 0.9%, 2.7%, and 4.2%, respectively.
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