From Tellers to Tech: Labor Demand Shift and Bank Lending

Yuna Heo and Steven Ongena
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Yuna Heo: University of Basel - Faculty of Business and Economics; Swiss Finance Institute
Steven Ongena: University of Zurich - Department Finance; Swiss Finance Institute; KU Leuven; NTNU Business School; Centre for Economic Policy Research (CEPR)

No 26-54, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: Using a novel measure of the composition of bank hiring, we examine how a labor demand shift affects bank lending. We find that the banks' demand shift toward higher-skilled labor is positively associated with lending. At the same time the banker-machine replacement also increases lending, through channels of operating efficiency, productivity, and lending capacity. This effect is stronger for banks that hire tech-bankers paying high wages. Conversely, lending shrinks for banks that reduce the number of relationship bankers. This effect is more concentrated among small banks and seems driven by declines in commercial and industrial loans. Overall, our findings indicate that the recent transformation in bank hiring expands credit supply, yet possibly also erodes relationship lending.

Keywords: labor demand shift; banker hiring composition; credit supply; technology bankers; relationship lending (search for similar items in EconPapers)
JEL-codes: G21 G32 J24 O33 (search for similar items in EconPapers)
Pages: 59 pages
Date: 2026-08, Revised 2026-09
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