Credit Capacity and the Propagation of Funding Shocks: Evidence from U.S. and Brazilian Financial Intermediaries (opens in new tab)

Why do similar funding shocks generate sharply different credit outcomes across countries? We develop and estimate a dynamic structural model in which intermediary credit capacity governs the transmission of funding disruptions to lending. Using supervisory data on U.S. banks and credit unions and Brazilian banks and cooperatives from 2002--2025, we recover institution-level credit capacity and its dynamics across major crisis episodes. Credit c...