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Sorry, we're closed: Loan conditions when bank branches close and firms transfer to another bank


Ongena, Steven; Bonfim, Diana; Nogueira, Gil (2016). Sorry, we're closed: Loan conditions when bank branches close and firms transfer to another bank. Banco de Portugal-Working Papers 2016 7, University of Zurich.

Abstract

We study loan conditions when bank branches close and firms subsequently transfer to a branch of another bank in the vicinity. Such transfer loans allow us for the first time to observe the conditions granted when banks pool-price new applicants. Consistent with recent theoretical work on hold up in bank-firm relationships we find that transfer loans do not receive the discount in loan rates that prevails when firms otherwise switch banks. We hereby critically augment recent empirical evidence on dynamic cycles in loan rates.

Abstract

We study loan conditions when bank branches close and firms subsequently transfer to a branch of another bank in the vicinity. Such transfer loans allow us for the first time to observe the conditions granted when banks pool-price new applicants. Consistent with recent theoretical work on hold up in bank-firm relationships we find that transfer loans do not receive the discount in loan rates that prevails when firms otherwise switch banks. We hereby critically augment recent empirical evidence on dynamic cycles in loan rates.

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Banking and Finance
Dewey Decimal Classification:330 Economics
Language:English
Date:January 2016
Deposited On:10 Nov 2016 07:57
Last Modified:26 Jul 2018 05:19
Series Name:Banco de Portugal-Working Papers 2016
OA Status:Green
Free access at:Official URL. An embargo period may apply.
Official URL:https://www.bportugal.pt/pt-PT/BdP%20Publicaes%20de%20Investigao/WP201607.pdf
Other Identification Number:merlin-id:13311

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