“Time for a Change of Scenery”: Loan Conditions When Firms Switch Bank Branches

Di Gong, Steven Ongena and Shusen Qi
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Di Gong: University of International Business and Economics (UIBE) - School of Banking and Finance
Shusen Qi: Xiamen University

No 25-10, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: Firms switching banks initially receive a lower loan rate. But what if firms switch branches within the same bank? Studying the population of corporate loans originated by a large commercial bank in China from 2010 to 2020, we find that when firms switch branches, the switching loans carry a significantly lower spread than the comparable nonswitching loans as well. After switching, the new branch further reduces the loan spreads initially, but ratchets it up afterwards, surprising evidence of the existence of intra-bank holdup ! Importantly, the deployment of FinTech within the bank first mitigates but then intensifies this holdup.

Keywords: bank lending; hold-up; firm-bank relationship (search for similar items in EconPapers)
JEL-codes: G21 G32 L14 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2025-01
New Economics Papers: this item is included in nep-cna
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Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp2510

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