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

Publikation: Bidrag til tidsskriftTidsskriftartikelForskningpeer review


This article investigates how cross-selling affects relationship lending using internal data from a large bank and the Swedish credit registry. I show that within a bank–firm relationship, profit earned from non-loan products cross-subsidizes loans and increases (1) credit supply and (2) the likelihood of the bank’s pausing or waiving interest payments for delinquent loans (lenience in delinquency). For identification, I exploit the Basel II-induced exogenous variation in products’ profitability while holding constant the firm’s creditworthiness and relationship informativeness. I find that the average affected firm experienced a decrease of 6 percent ($400,000) in credit supply and 30 percent (9.8 pp) in lenience in delinquency. The results highlight the importance of cross-subsidization as a mechanism through which cross-selling affects bank–firm relationships and inform optimal regulatory design for lenders who multi-produce.
TidsskriftReview of Finance
Antal sider42
StatusUdgivet - 12 sep. 2023

Bibliografisk note

Epub ahead of print. Published online: 12 September 2023.


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