Ph.d.-forsvar: Thais Lærkholm Jensen: Credit Supply and The Real Economy"
An entrepreneur with a great new idea for starting a new business, or a young couple looking to buy a house will likely find themselves in a position where they will need to ask others for money to carry out their ambitions. In this situation, they will have to turn to the financial markets to assist them in making these dreams come true, and in effect they are intrinsically dependent on the availability of credit.
The recent financial crisis, with the recession that ensued, has accentuated the need for understanding how the financial markets and in particular the availability of loanable funds impacts the economy at large, including the entrepreneur and the couple buying a house. The fundamental challenge, however, in studying the role of credit in shaping real outcomes, is that the demand and supply of credit is determined contemporaneously, leaving a spectator wondering to what extent an observed fall in lending is driven by consumers and businesses reducing the demand for credit or, if it is in turn banks that ration the supply of credit.
To enhance our knowledge of this illusive topic, the principal focus of this dissertation is concerned with empirically separating the demand and supply for credit to make a causal interpretation of how credit supply shape outcomes for entrepreneurs, households and businesses.
The results obtained in this dissertation strive to enhance our understanding of how credit supply interacts with the real economy and guide policy makers concerned with designing a financial system that on the one hand enables and promotes growth while at the same time is also resilient to future financial crises.