Bank Capital and Lending Relationships

Michael Schwert

Working Paper Series from Ohio State University, Charles A. Dice Center for Research in Financial Economics

Abstract: This paper investigates the mechanisms behind the matching of banks and firms in the loan market and the implications of this matching for lending relationships, bank capital, and the provision of credit. I find that bank-dependent firms borrow from well capitalized banks, while firms with access to the bond market borrow from banks with less capital. This matching of bank-dependent firms with stable banks smooths cyclicality in aggregate credit provision and mitigates the effects of bank shocks on the real economy.

JEL-codes: G21 G32 (search for similar items in EconPapers)
Date: 2017-02
New Economics Papers: this item is included in nep-ban
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Citations: View citations in EconPapers (9)

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Journal Article: Bank Capital and Lending Relationships (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:ecl:ohidic:2016-17

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