Big Broad Banks: How Does Cross-selling Affect Lending?

Publikation: KonferencebidragPaperForskningpeer review

Abstrakt

This paper provides evidence that banks make lending decisions based on the borrower’s overall profitability to the bank and identifies this profit channel. Specifically, I show that non-loan profit affects bank lending using both internal data of a large bank and the Swedish credit registry. I disentangle the profit channel from the well-known information channel, and document that non-loan profit increases 1) credit supply and 2) lenience in delinquency. For identification, I exploit Basel II-induced exogenous variation in products' profitability and find that the average affected firms experienced a decrease of 6.1% ($400,000) in credit supply and 24% (9.9 pp) in lenience in delinquency. As a result, affected firms reduced investment by 8.4%.
OriginalsprogEngelsk
Publikationsdato2021
Antal sider62
DOI
StatusUdgivet - 2021
BegivenhedChina International Conference in Finance 2021 - Online and Onsite, Shanghai, Kina
Varighed: 6 jul. 20219 jul. 2021
https://www.cicfconf.org/2021/m/index.html

Konference

KonferenceChina International Conference in Finance 2021
LokationOnline and Onsite
Land/OmrådeKina
ByShanghai
Periode06/07/202109/07/2021
Internetadresse

Emneord

  • Relationship banking
  • Cross-selling
  • Credit allocation
  • Debt renegotiation

Citationsformater