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Current theoretical and empirical research suggests that small banks have a comparative advantage in processing soft information and delivering relationship lending. The most comprehensive analysis of this view found using U.S. data that smaller SMEs borrow from smaller banks and smaller banks...
Persistent link: https://www.econbiz.de/10014026525
We propose a worldwide-based loan portfolio to measure banks’ sectoral concentration that features prominently in episodes of bank specialization. We use the banks’ real loan allocation worldwide instead of the in-sample data to compute a bank specialization. We find that firms borrowing...
Persistent link: https://www.econbiz.de/10014254329
We study bank specialization in lending in the U.S. corporate loan market. We document that banks specialize in lending to specific industries. Specialization is persistent over time and common across industries. Using detailed information on syndicated loans, we show that the typical loan...
Persistent link: https://www.econbiz.de/10014349527
Despite the importance of the hypothesis that trade creditors may act as relationship lenders, it has been virtually impossible to directly test this hypothesis because of a lack of data. We attempt to overcome this problem by using a relatively new Japanese database on small and midsized...
Persistent link: https://www.econbiz.de/10014056182
This paper is the first to consider all three important organizational forms, such as industrial diversification, global diversification, and geographic dispersion, in the empirical framework to find out which types of diversification do matter for the contracting of bank loans. I find that, on...
Persistent link: https://www.econbiz.de/10012836431
Captive finance subsidiaries, vertically integrated lenders, create a potential channel for trade policy to affect consumer credit. Examining the Trump administration 2018 metal tariffs’ impact on auto manufacturers, we find consumers received worse auto loan terms from captive lenders after...
Persistent link: https://www.econbiz.de/10013405453
Economists have long debated the relationships between market structure of banking sector and the profitability. General consensus asserts that more concentrated market is associated with higher profitability: banks with higher market share generally achieve higher profits. This empirical...
Persistent link: https://www.econbiz.de/10013004058
We empirically examine the impact of bank consolidation on bank acquisition of soft information about borrowers. Using a dataset of small business financing, we find that mergers of small banks have a negative impact on soft information acquisition, whereas mergers of large banks have no impact....
Persistent link: https://www.econbiz.de/10012954778
The current literature on SME loan underwriting assumes that banks use just one of two lending technologies: relationship lending for opaque SMEs and transactions-based lending for relatively transparent SMEs. Recent work has departed from this view and hypothesizes that banks use a variety of...
Persistent link: https://www.econbiz.de/10014026258
The percentage of out-of-market loan originations to small businesses, as measured by both amounts and number, have been trending upward over the past two decades. The percentage of out-of-market loan originations to small businesses, as measured by both amounts and number, declined when...
Persistent link: https://www.econbiz.de/10013492321