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The author tells the effect of bank loan supply through the business cycle using firm level data from 1990 to 2009. The contribution of the paper is to address two of the main empirical challenges in identifying the effects of bank credit supply. First, they focus on firms' choice between two close forms of external financing: bank debt and public bonds. By conditioning the sample of firms raising new debt, they can rule out a demand explanation for the drop in bank borrowing. Second, by doing the analysis at the firm level, they can directly address how the composition of firms raising finance varies through time.
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