Working Paper: NBER ID: w21800
Authors: 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 firms take the pattern of bank specialization into account when selecting their lending banks, and that credit supply shocks disproportionately affect a firm’s exports to markets where the lender specializes in. Thus, bank specialization makes credit difficult to substitute, which has consequences for competition in credit markets and the transmission of credit shocks to the real economy.
Keywords: bank lending; exporting firms; market specialization; credit supply shocks
JEL Codes: F14; G21
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| market-specific bank specialization (G21) | biased estimates (C51) |
| market-specific specialization persists (D40) | new firm-bank relationships (G21) |
| bank specialization (G21) | borrowing increase (H74) |
| export shocks (F41) | credit demand elasticity increase (D12) |
| credit supply shocks (E51) | elasticity of exports increase (F14) |