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Two-sided matching in the loan market

Jiawei Chen and Kejun Song

International Journal of Industrial Organization, 2013, vol. 31, issue 2, 145-152

Abstract: This paper investigates the matching between banks and firms in the loan market. We estimate a many-to-one two-sided matching model using the Fox (2010) matching maximum score estimator. Using data on the U.S. loan market from 2000 to 2003, we find evidence of positive assortative matching of sizes. Moreover, we show that banks and firms prefer partners that are geographically closer, giving support to the importance of physical proximity for information gathering and expertise sharing. We also show that banks and firms prefer partners with whom they had prior loans, indicating that prior loan relationship plays an important role in the selection of current partners.

Keywords: Loan market; Two-sided matching; Maximum score estimator (search for similar items in EconPapers)
JEL-codes: C78 G21 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (24)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:31:y:2013:i:2:p:145-152

DOI: 10.1016/j.ijindorg.2012.12.002

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International Journal of Industrial Organization is currently edited by P. Bajari, B. Caillaud and N. Gandal

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