ECB research uncovers flaws in standard credit market analysis

Economic analysis of credit markets often relies on a model that assumes firms have a uniform demand for credit across all their lenders , but a new paper from the European Central Bank (ECB) has shown that this long-held assumption is empirically untenable .

The working paper , titled Identifying relationship-level effects using covariance restrictions and authored by Olivier De Jonghe and Daniel Lewis, proposes a new methodology to decompose