We draw on stylized facts from the finance literature to build a model where altering the relative costs of bank and bond financing changes the entire distribution of firm size, with implications for the aggregate capital stock, output, and welfare. Reducing transaction costs in the bond market increases the output and profits of midsize firms at the expense of both the largest and smallest fir...

This paper establishes an objective and comprehensive evaluation index system of online P2P lending platforms based on the online P2P lending theory with the Analytic Hierarchy Process in the perspective of lenders. It also makes the empirical analysis which takes ten P2P platforms as examples. The results show that the evaluation system is scientific and reasonable, which can provide reference...

This paper analyzes how scope-expansion by a bank affects its lending activity. Scope economies between activities naturally arises from an incentive problem in the lending business. It shows that the sale of multiple product can impede banks to credibly commit to penalize borrowers in default. Thus, borrowers are more likely to face soft budget constraint. It finds that a more competitive envi...

An increasingly common method for lending institutions to demonstrate their commitment to and compliance with the Community Reinvestment Act of 1977 (CRA) and fair lending laws has been to enter into agreements with community groups and other entities to help ensure the flow of credit throughout their service area. Table 1 shows that the volume of loan pledges associated with these agreements, ...

An analysis of the characteristics of farm businesses by size of FCS direct lending association suggests that further consolidation of FCS lending should have limited negative impacts on credit availability. Commercial-sized farm businesses with FCS real estate debt appeared similar to those who obtained credit from competing lenders, but smaller associations and those with fewer stockholders p...

This paper discusses two ways to amend the optimal lending contract under asymmetric information studied in Clementi and Hopenhayn (2006) to change its long-run implications so that firm growth and exit driven by borrowing constraints exist in the long run. One way assumes that the entrepreneur has a lower discount factor than the bank, and the other assumes the bank has limited commitment. The...

Relationship lending helps reduce asymmetric information, which potentially creates benefits for borrowers. However, empirical evidence is mixed. We conduct a meta-analysis to summarize and explain the heterogeneity in the results in the literature using hand-collected information from 101 studies in the U.S., Europe, Asia and Latin America from 1970-2010. We find that strong relationships are ...