Market Structure, Screening Activity, and Bank Lending Behavior

Adverse Selection, Market Structure, and Competitive Pricing in Bank Lending

Bank Lending and the Term Structure∗

We study the implications of bank lending for the term structure. Specifically, we consider how resources are optimally allocated between a banking sector and a risky sector. To do so, we use a “two trees” framework with a risky and risk free sector, in which capital moves sluggishly between the two. We characterize equilibrium and illustrate how financial flexibility affects the term structure...

The New Theory of Commercial Banking and Bank Lending Behavior

The paper studies the bank’s lending decision, based on three observed phenomena: Banks earn substantial profits from off-balance sheet activities and services, which they take into account in their lending decisions. Secondly, the critical point in the customer relation is the loan decision: the probability of the customer staying with the bank is a function of the loan extended each time one ...

SMEs and Bank Lending Relationships:

This paper studies the impact of bank mergers on firm-bank lending relationships using information from individual loan contracts in Belgium. We analyse the effects of bank mergers on the probability of borrowers maintaining their lending relationships and on their ability to continue tapping bank credit. The Belgian financial environment reflects a number of interesting features: high banking ...

Bank Deposits and Relationship Lending∗

I study the role of deposit accounts in bank-firm lending relationships, using a dataset with detailed information about all Norwegian firms’ bank deposit and loan account balances. I show that firms are more likely to increase borrowing from a bank where they hold deposit accounts, and less likely to end the lending relationship. In regressions with both firm and bank fixed effects, I find tha...