The information content from lending relationships across the supply chain

Theo Cotrim Martins, Rafael Schiozer and Fernando de Menezes Linardi

Journal of Financial Intermediation, 2023, vol. 56, issue C

Abstract: Using unique administrative data on firm-to-firm payments and bank-to-firm lending, we investigate how lending to a firm is affected by same-bank lending to the firm's customers and suppliers. We show that the supply of loans to a firm increases when the firm's customers have loans from the same bank. We also find that negative information about a firm's top customer causes banks to tighten the loan supply to the firm, and particularly more so when the firm's sales are concentrated on this customer. These results suggest that lending to firms connected through the supply chain conveys valuable information to banks.

Keywords: Bank relationship; Cross-client lending; Supply chain; Network spillovers (search for similar items in EconPapers)
JEL-codes: E24 E50 E59 G21 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinin:v:56:y:2023:i:c:s1042957323000402

DOI: 10.1016/j.jfi.2023.101057

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