The bank lending channel and industrial competition dynamics
: evidence from matched firm­bank data

  • Giovanni Minolfi (Student)

Student thesis: Master's Thesis


This thesis explores how bank lending shocks affect competition dynamics between firms. We argue that a bank lending shock dampens a firm’s competitive position, instead advantaging her rivals,which reap benefits from the firm’s distress. Using matched firm-bank data from the Portuguese credit register (2006-2017), we show that a bank lending shock hitting a firm’s competitors is associated with higher capital, sales and employment growth rates for that firm. However, this impactis not significant at a 5% level, suggesting that the industrial competition channel is not a substan tial mechanism in our main sample. Instead, we find significant effects on a subset of firms: i)larger firms and ii) firms operating in more concentrated industries, which exhibit higher sales andemployment growth rates when their competitors go into financial distress. This has an important implication: credit shocks could have distributional impacts across firms. We present evidence that both credit and market shares distribution became increasingly concentrated during the Great Financial Crisis. Finally, while we cannot make inference at the macroeconomic level, the industrial competition channel hypothesis suggested by our results is consistent with the reallocation process observed.
Date of Award17 May 2023
Original languageEnglish
Awarding Institution
  • Universidade Católica Portuguesa
SupervisorJoana Silva (Supervisor) & Diana Bonfim (Co-Supervisor)


  • Bank lending channel
  • Industrial competition
  • Great recession


  • Mestrado em Economia

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