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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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    References listed on IDEAS

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    1. Patrick Bolton & Xavier Freixas & Leonardo Gambacorta & Paolo Emilio Mistrulli, 2016. "Relationship and Transaction Lending in a Crisis," Review of Financial Studies, Society for Financial Studies, vol. 29(10), pages 2643-2676.
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    4. Daniel Paravisini & Veronica Rappoport & Philipp Schnabl & Daniel Wolfenzon, 2015. "Dissecting the Effect of Credit Supply on Trade: Evidence from Matched Credit-Export Data," Review of Economic Studies, Oxford University Press, vol. 82(1), pages 333-359.
    5. Daniel Paravisini, 2008. "Local Bank Financial Constraints and Firm Access to External Finance," Journal of Finance, American Finance Association, vol. 63(5), pages 2161-2193, October.
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    12. Friederike Niepmann & Tim Schmidt-Eisenlohr, 2013. "Banks in international trade finance: evidence from the U.S," Staff Reports 633, Federal Reserve Bank of New York.
    13. Nicolas Berman & Philippe Martin & Thierry Mayer, 2012. "How do Different Exporters React to Exchange Rate Changes?," The Quarterly Journal of Economics, Oxford University Press, vol. 127(1), pages 437-492.
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    Citations

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    Cited by:

    1. Alberto Martin & Enrique Moral-Benito & Tom Schmitz, 2018. "The financial transmission of housing bubbles: evidence from Spain," Economics Working Papers 1613, Department of Economics and Business, Universitat Pompeu Fabra.
    2. A. Berthou & G. Horny & J-S. Mésonnier, 2018. "Dollar Funding and Firm-Level Exports," Working papers 666, Banque de France.
    3. Accominotti, Olivier, 2016. "International Banking and Transmission of the 1931 Financial Crisis," CEPR Discussion Papers 11651, C.E.P.R. Discussion Papers.
    4. Alberto Martin & Enrique Moral Benito & Tom Schmitz, 2018. "The financial transmission of housing bubbles: evidence from spain," 2018 Meeting Papers 299, Society for Economic Dynamics.
    5. repec:eee:jaecon:v:64:y:2017:i:2:p:253-277 is not listed on IDEAS
    6. Eckley, Peter & Benetton, Matteo & Latsi, Georgia & Garbarino, Nicola & Kirwin, Liam, 2017. "Specialisation in mortgage risk under Basel II," Bank of England working papers 639, Bank of England.
    7. Mariana Spatareanu & Vlad Manole & Ali Kabiri, 2017. "Do Bank Shocks Hamper Firms’ Innovation?," Working Papers Rutgers University, Newark 2017-003, Department of Economics, Rutgers University, Newark.
    8. Beck, Thorsten & Da-Rocha-Lopes, Samuel & Silva, Andre, 2017. "Sharing the Pain? Credit Supply and Real Effects of Bank Bail-ins," CEPR Discussion Papers 12058, C.E.P.R. Discussion Papers.
    9. Alberto Martín & Enrique Moral-Benito & Tom Schmitz, 2018. "The financial transmission of housing bubbles: evidence from Spain," Working Papers 1823, Banco de España;Working Papers Homepage.
    10. Kristian Blickle, 2017. "Local Banks, Credit Supply, and House Prices," Working Papers on Finance 1811, University of St. Gallen, School of Finance.
    11. Alberto Martín & Enrique Moral-Benito & Tom Schmitz, 2018. "The Financial Transmission of Housing Bubbles: Evidence from Spain," Working Papers 625, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.

    More about this item

    Keywords

    banking; export finance; specialization;

    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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