Firm subsidies, financial intermediation, and bank stability / Aleksandr Kazakov, Michael Koetter, Mirko Titze, Lena Tonzer
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Firm subsidies, financial intermediation, and bank stability
Discovery
1820027988
URN
urn:nbn:de:gbv:3:2-920111
DOI
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Publication history
Halle (Saale), Germany : Halle Institute for Economic Research (IWH) - Member of the Leibniz Association, [26. Oktober 2022]
Content
1 Online-Ressource (III, 56 Seiten, 6,54 MB) : Diagramme
Edition
Language
eng
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Abstract
We use granular project-level information for the largest regional economic development program in German history to study whether government subsidies to firms affect the quantity and quality of bank lending. We combine the universe of recipient firms under the Improvement of Regional Economic Structures program (GRW) with their local banks during 1998-2019. The modalities of GRW subsidies to firms are determined at the EU level. Therefore, we use it to identify bank outcomes. Banks with relationships to more subsidized firms exhibit higher lending volumes without any significant differences in bank stability. Subsidized firms, in turn, borrow more indicating that banks facilitate regional economic development policies.
Series
IWH-Diskussionspapiere ; 2022, no. 24 ppn:837399270