Relationship lending in Peru

Alessandro Tomarchio
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Alessandro Tomarchio: Banco Central de Reserva del Perú

No 2022-010, Working Papers from Banco Central de Reserva del Perú

Abstract: This paper studies whether the strength of bank-firm relationships has an impact on credit conditions, particularly during a stress scenario such as COVID-19 crisis. Using the Peruvian credit registry, we find that firms get better credit conditions (higher credit line and loan size growth, lower interest rate growth) in the institution where they have a stronger bond, measured by years of relationship, geographical proximity to a branch and share of credit. Furthermore, those effects are stronger compared to a pre-COVID scenario and heterogeneous depending on firm characteristics. We also find a positive effect of our relationship lending indices on the probability of getting Reactiva loans and loan rescheduling, and on the growth rate of the number of employees.

Keywords: relationship lending; credit supply; COVID-19 (search for similar items in EconPapers)
JEL-codes: E51 G21 (search for similar items in EconPapers)
Date: 2022-07
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