Specialization in Banking / Kristian Blickle, Cecilia Parlatore, Anthony Saunders.

Format:

Book

Author/Creator:

Blickle, Kristian.

Contributor:

National Bureau of Economic Research.

Parlatore, Cecilia.

Saunders, Anthony.

Series:

Working Paper Series (National Bureau of Economic Research) no. w31077.

NBER working paper series no. w31077

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2023.

Summary:

Using supervisory data on the loan portfolios of large US banks, we document that these banks specialize by concentrating their lending disproportionately in a few industries. This specialization is consistent with banks having industry-specific knowledge, reflected in reduced risk of loan defaults, lower aggregate charge-offs, and higher propensity to lend to opaque firms in the preferred industry. Banks attract high-quality borrowers by offering generous loan terms in their specialized industry, especially to borrowers with alternative options. Banks focus on their preferred industry in times of instability and relatively lower tier 1 capital as well as after sudden surges in deposits.

Notes:

Print version record

March 2023.