Khwaja-Mian (2008) EstimatorJuly 2020
In this post, I explain the Khwaja-Mian (2008) estimator, which is a technique used to control for credit demand shocks in order to identify credit supply shocks i.e. the "bank lending channel." Authors introduce time-variant firm fixed effects to fully capture the demand for credit by focusing on firms with multiple banking relationships. They actually do more than this, but subsequent papers citing this paper only refer to the inclusion of fixed effects.