Aggregate Implications of Credit Relationship Flows: a Tale of Two Margins
77 Pages Posted: 6 May 2021
Date Written: January 2021
This paper documents the aggregate properties of credit relationship flows within the commercial
loan market in France from 1998 through 2018. Using detailed bank-firm level data from the French
Credit Register, we show that banks actively and continuously adjust their credit supply along both
intensive and extensive margins. We particularly highlight the importance of gross flows associated
with credit relationships and show that they are (i) volatile and pervasive throughout the cycle, and
(ii) can account for up to 48 percent of the cyclical and 90 percent of the long-run variations in
aggregate bank credit.
Keywords: Credit Flows; Financial Institutions; Relationship Lending; Search and Matching.
JEL Classification: E51; G21; E52; E32
Suggested Citation: Suggested Citation