The Impact of Competition on Bank Orientation and Specialization (new titel: The impact of competition on bank orientation)

Hans Degryse and Steven Ongena

No 1119, CESifo Working Paper Series from CESifo

Abstract: How do banks react to increased interbank competition? Recent banking theory offers conflicting predictions about the impact of competition on bank orientation - i.e., the choice of relationship based versus transactional banking - and bank industry specialization. We empirically investigate the impact of interbank competition on bank branch orientation and specialization. We employ a unique data set containing detailed information on bank-firm relationships and industry classification. We find that bank branches facing stiff local competition engage relatively more in relationship-based lending but specialize somewhat less in a particular industry. Our results illustrate that competition and relationships are not necessarily inimical.

Keywords: bank orientation; bank industry specialization; competition; lending relationships (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (1)

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