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Karolin Kirschenmann (Aalto): Funding vs. real economy shock: The impact of the 2007-2009 crisis on small firms’ credit availability

by Gunhild Berg and Karolin Kirschenmann

This paper analyzes the impact of two distinct shocks stemming from the cross-border
transmission of the 2007-2009 crisis on credit availability for small firms. We use data from
AccessBank Azerbaijan which was affected in its liquidity position during the second and
third quarters of 2008 by delays in its refinancing. The Azeri real economy was hit by the
global crisis from the fourth quarter of 2008 onwards with a combined decline in oil prices,
exports, remittances, and domestic demand. Therefore, we have a setting in which we can
contrast a pure supply side shock with a real economy shock that hit exactly when the bank’s
funding position strengthened again. We find that during the funding shock (potential)
borrowers are discouraged from applying for loans. However, for those applications made, the
likelihood of loan approval is not affected. The real economy shock, in contrast, reduces the
approval likelihood for SME loans in particular, while agro and micro loans are considerably
less affected. Finally, bank relationships increase credit availability in good as well as in bad

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Pyydämme teitä ilmoittautumaan etukäteen Liisa Mannilalle,
puh. 010 831 2268, sähköposti  liisa.mannila (at)

Seminaarit pidetään tiistaisin klo 10:30 (ellei toisin ilmoiteta), Rauhankatu 19, 3. kerroksen seminaarihuone.