Bank orientation and industry specialization

Hans Degryse and Steven Ongena

No 943, Proceedings from Federal Reserve Bank of Chicago

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: Banking market; Bank loans; Bank competition (search for similar items in EconPapers)
Pages: 412-427
Date: 2004
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Published in Conference on Bank Structure and Competition (2004 : 40th) ; How do banks compete? strategy, regulation, and technology

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