TY  - JOUR
AU  - Benmelech, Efraim
AU  - Meisenzahl, Ralf R
AU  - Ramcharan, Rodney
TI  - The Real Effects of Liquidity During the Financial Crisis: Evidence from Automobiles
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 22148
PY  - 2016
Y2  - April 2016
DO  - 10.3386/w22148
UR  - http://www.nber.org/papers/w22148
L1  - http://www.nber.org/papers/w22148.pdf
N1  - Author contact info:
Efraim Benmelech
Kellogg School of Management
Northwestern University
2001 Sheridan Road
Evanston, IL 60208
Tel: 847/491-4462
Fax: 847/491-5719
E-Mail: e-benmelech@kellogg.northwestern.edu

Ralf Meisenzahl
Federal Reserve Bank of Chicago
230 South LaSalle Street
Chicago, IL 60604-1413
E-Mail: ralf.meisenzahl@gmail.com

Rodney Ramcharan
University of Southern California
E-Mail: rramchar@marshall.usc.edu
M2  - featured in NBER digest on 2016-07-19
AB  - Illiquidity in short-term credit markets during the financial crisis might have severely curtailed the supply of non-bank consumer credit. Using a new data set linking every car sold in the United States to the credit supplier involved in each transaction, we find that the collapse of the asset-backed commercial paper market reduced the financing capacity of such non-bank lenders as captive leasing companies in the automobile industry. As a result, car sales in counties that traditionally depended on non-bank lenders declined sharply. Although other lenders increased their supply of credit, the net aggregate effect of illiquidity on car sales is large and negative. We conclude that the decline in auto sales during the financial crisis was caused in part by a credit supply shock driven by the illiquidity of the most important providers of consumer finance in the auto loan market. These results also imply that interventions aimed at arresting illiquidity in short-term credit markets might have helped to contain the real effects of the crisis.
ER  -