Another look at banks as lenders of first resort: evidence from the COVID-19 crisis
Journal of Financial Economic Policy
ISSN: 1757-6385
Article publication date: 18 August 2022
Issue publication date: 28 October 2022
Abstract
Purpose
This study aims to provide a fresh look at banks as lenders in and extending past the COVID-19 crisis, with a particular focus on examining the results of recent work by Lei et al. (2020).
Design/methodology/approach
The authors’ replication, as well as the original paper, uses a fixed-effects model on panel data. The authors discuss issues regarding data sources as well as use an array of panel data robustness checks to help ascertain an appropriate empirical specification for continued research of this type.
Findings
The authors show that the results of Lei et al. (2020) are sensitive to the data source, as well as the construction of the standard errors in their regression framework, with an appropriate specification uncovered through panel data statistical tests. The authors also provide some extensions to the original work by including interacted fixed-effects models and extending the sample period from 2020Q1 to 2021Q1, noting some changes in results.
Originality/value
The authors provide novel results on banks’ lending constraints both at the onset of the COVID-19 pandemic and shortly thereafter. The study also provides an empirical framework for future studies conducted on similar panel data sets.
Keywords
Acknowledgements
A special thank you to Dr James Barth who motivated this research and without whose many insightful comments this would not have been possible.
Citation
Flynn, M. and Wu, Y. (2022), "Another look at banks as lenders of first resort: evidence from the COVID-19 crisis", Journal of Financial Economic Policy, Vol. 14 No. 6, pp. 796-810. https://doi.org/10.1108/JFEP-07-2022-0175
Publisher
:Emerald Publishing Limited
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