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Working Paper
The Collateral Channel and Bank Credit
Our paper studies the role of the collateral channel for bank credit using confidential bank-firm-loan data. We estimate that for a 1 percent increase in collateral values,firms pledging real estate collateral experience a 12 basis point higher growth in banklending with higher sensitivities for more credit constrained firms. Higher real estatevalues boost firm capital expenditures and lead to lower unemployment and higheremployment growth and business creation. Our estimates imply that as much as 37percent of employment growth over the period from 2013 to 2019 can be attributed to the ...