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Specialization in bank lending: evidence from exporting firms

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  • Daniel Paravisini
  • Veronica Rappoport
  • Philipp Schnabl

Abstract

We develop an empirical approach for identifying specialization in bank lending using granular data on borrower activities. We illustrate the approach by characterizing bank specialization by export market, combining bank, loan, and export data for all firms in Peru. We find that all banks specialize in at least one export market, that specialization affects a firm's choice of new lenders and how to finance exports, and that credit supply shocks disproportionately affect a firm's exports to markets where the lender specializes in. Thus, bank market-specific specialization makes credit difficult to substitute, with consequences for competition in credit markets and the transmission of credit shocks to the economy.

Suggested Citation

  • Daniel Paravisini & Veronica Rappoport & Philipp Schnabl, 2017. "Specialization in bank lending: evidence from exporting firms," CEP Discussion Papers dp1492, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:cepdps:dp1492
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    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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