The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the view of the World Bank, its Executive Directors, or the countries that they represent. We would like to thank Pablo Zoido-Lobaton for excellent research assistance. Financial support from the World Bank's Research Support Budget (RPO 681-70) is grateful...

If the technological revolution which has taken place over the past decades has lowered information costs and if information costs increase in distance, distance should – ceteris paribus – become less important in determining international bank lending. We are using a dataset on assets and liabilities of commercial banks from five countries (France, Germany, Italy, UK, US) in up to 50 host coun...

Relationship lending is a common practice in credit financing all over the world, particularly in Germany. On the basis of a comprehensive data set comprising information on firm-bank relationships for more than 16,000 observations, this study analyses the determinants of relationship lending in Germany. We find that small, young and R&D-intensive firms tend to choose relationship lending. Furt...

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In this paper we re-examine commercial banks’ lending behavior taking into account changes in the stance of monetary policy in conjunction with changes in financial sector uncertainty. Using a very large data set covering all banks in the US between 1986–2000, we show that financial uncertainty has an important and significant role in the monetary policy transmission mechanism that varies acros...

Authorized to Appraise Date: October 6, 2003 IBRD Amount ($m): Bank Approval: February 27, 2004 IDA Amount ($m): Global Supplemental Amount ($m): 5.50 Managing Unit: AFTES Lending Instrument: Specific Investment Loan (SIL) Status: Lending Sector: General agriculture, fishing and forestry sector Theme: Biodiversity (P); Other environment and natural resources management (P); Environmental polici...

raditional monetary theory has largely ignored the role of bank equity. Bank-centered accounts of how monetary policy affects the real economy usually focus on the role of reserves and reserve requirements in determining the volume of demand deposits and, in the case of the bank lending channel, bank loans. As Friedman (1991) observed, “Traditionally, most economists have regarded the fact that...

We consider the interaction between the roles of a bank as a facilitator of payments in the economy and as a lender. In our model, banks make loans by issuing digital claims to an entrepreneur, who then uses them to pay for inputs. Issuing digital claims has two effects on a bank’s liquidity. First, some of these claims used as payment are cashed in before the project is over, necessitating tra...

I analyze banks’ incentives to acquire expertise in judging the credit-worthiness of borrowers in an industry with uncertain business conditions. The optimal industrial organization of bank lending features several banks with industry expertise, as well as a competitive fringe of banks without such expertise. The analysis provides a foundation for analyzing the relative merits of focus vs. dive...

We use an information-theoretic approach to describe changes in lending relationships between financial institutions around the time of the Lehman Brothers failure. Unlike previous work that conducts maximum likelihood estimation on undirected networks our analysis distinguishes between borrowers and lenders and looks for broader lending relationships (multi-bank lending cycles) that extend bey...