Borrower Technology Similarity and Bank Loan Contracting

Mingze Gao, Yunying Huang, Steven Ongena and Eliza Wu
Additional contact information
Mingze Gao: University of Sydney
Yunying Huang: University of Sydney

No 23-84, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: Do banks accumulate knowledge about corporate technology, and does it matter for their lending? To answer this question, we combine corporate innovation with syndicated loan data. We find that loans to firms sharing similar technologies with banks’ prior borrowers obtain lower loan spreads. We can rule out product market competition, the value of their technology and ability to innovate, and/or numerous other firm characteristics as alternative explanations. By exploiting the adoption of intellectual property protection laws and the consummation of bank mergers and acquisitions, we can show that shocks to banks’ technology knowledge causally affect loan spreads.

Keywords: technology similarity; loan contracting; matching model; relationship lending (search for similar items in EconPapers)
JEL-codes: G21 G32 O33 (search for similar items in EconPapers)
Pages: 64 pages
Date: 2023-09
New Economics Papers: this item is included in nep-ban, nep-cfn, nep-cse and nep-fmk
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Related works:
Working Paper: Borrower Technology Similarity and Bank Loan Contracting (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp2384

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