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Better the devil you know: Home and sectoral biases in bank lending

Aurore Burietz () and L. Ureche-Rangau

International Economics, 2020, vol. 164, issue C, 69-85

Abstract: This paper empirically investigates banks’ lending and the extent to which they are influenced by specific preferences in terms of geographical location and industry. We study whether banks develop a field of expertise and focus on it, or whether they prefer to grant loans quite evenly among countries and industries. We manually built an original database of syndicated loans for banks in the four major banking systems in the eurozone, to estimate the determinants of loans’ amounts between 2005 and 2013. Our findings highlight a domestic bias and a sectoral bias with banks lending larger amounts to their domestic borrowers and to industries they are more familiar with.

Keywords: Credit supply; Biases; Syndicated loan market (search for similar items in EconPapers)
JEL-codes: F34 G01 G21 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1016/j.inteco.2020.08.004

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