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

Research output: Contribution to conferencePaperResearchpeer-review


Using unique micro-data that contain the internal information on all corporate customers of a large Nordic bank, I show that combining loan and non-loan products (cross-selling) has two benefits. First, it increases credit supply, especially in recessions. Second, it increases the likelihood of receiving lenient treatment in delinquency. I argue that non-loan relationships play an important role in determining credit supply and debt renegotiation, not only by (i) mitigating information asymmetries (as suggested in earlier literature), but also by (ii) increasing the profitability of the relationship. Exploiting an exogenous and differential change in similar products' profitability due to the Basel II implementation, I estimate the causal effect of this new profit channel on credit supply. A 20 percent decrease in non-loan products' profitability (i) reduces credit supply to affected firms by 10 percent (500,000 USD) compared with unaffected firms, and (2) reduces likelihood of receiving lenient treatment for affected firms by 58 percent (23 pp) compared with unaffected firms, conditional on being delinquent.
Original languageEnglish
Publication date2020
Number of pages54
Publication statusPublished - 2020
EventThe 47th European Finance Association Annual Meeting. EFA 2020 - Virtual from The Aalto University School of Business, Helsinki, Finland
Duration: 20 Aug 202021 Aug 2020
Conference number: 47


ConferenceThe 47th European Finance Association Annual Meeting. EFA 2020
LocationVirtual from The Aalto University School of Business
Internet address


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

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