American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Merchants of Death: The Effect of Credit Supply Shocks on Hospital Outcomes
American Economic Review
vol. 114,
no. 11, November 2024
(pp. 3623–68)
Abstract
This study examines the link between credit supply and hospital health outcomes. We use bank stress tests as exogenous shocks to credit access for hospitals that have lending relationships with tested banks. We find that affected hospitals shift their operations to increase resource utilization following a negative credit shock but reduce the quality of their care to patients across a variety of measures, including a significant increase in risk-adjusted readmission and mortality rates. The results indicate that access to credit can affect the quality of health care hospitals deliver, pointing to important spillover effects of credit market frictions on health outcomes.Citation
Aghamolla, Cyrus, Pinar Karaca-Mandic, Xuelin Li, and Richard T. Thakor. 2024. "Merchants of Death: The Effect of Credit Supply Shocks on Hospital Outcomes." American Economic Review, 114 (11): 3623–68. DOI: 10.1257/aer.20221705Additional Materials
JEL Classification
- G21 Banks; Depository Institutions; Micro Finance Institutions; Mortgages
- G32 Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- I11 Analysis of Health Care Markets
- I18 Health: Government Policy; Regulation; Public Health