Credit Supply: Identifying Balance-Sheet Channels with Loan Applications and Granted Loans

To identify credit availability we analyze the extensive and intensive margins of lending with loan applications and all loans granted in Spain. We find that during the period analyzed both worse economic and tighter monetary conditions reduce loan granting, especially to firms or from banks with lower capital or liquidity ratios. Moreover, responding to applications for the same loan, weak banks are less likely to grant the loan. Our results suggest that firms cannot offset the resultant credit restriction by turning to other banks. Importantly the bank-lending channel is notably stronger when we account for unobserved time-varying firm heterogeneity in loan demand and quality

Informational differentiation, interest rate dispersion and market power

This article investigates the existence and determinants of interest rate dispersion in loans and deposits of Spanish banks under the lens of informational differentiation. We find that interest rate dispersion and market power co-vary in the same direction across bank products under differences in variables that affect customers' incentives to search.