Seminar

Seminar: Loss of a lending relationship: shock or relief?

Op dinsdag 5 november geeft Karolis Liaudinskas (UPF) een presentatie getiteld: "Loss of a lending relationship: shock or relief?"

Datum
5 november 2019
Tijd
13:00 - 14:00
Locatie
CPB-kantoor, Bezuidenhoutseweg 30, Den Haag (Vergaderzaal 3 - Braamzaal)
Presentatie
Karolis Liaudinskas (UPF)
Discussant
Benedikt Vogt (CPB)
Voertaal
English

We use loan-level data and a novel identification setting – closures of banks – to study how forced break-ups of lending relationships affect firms’ borrowing costs. We find that after a financially distressed bank closed and its best borrowers were forced to switch, their borrowing costs dropped steeply and converged to the market’s average. We document no such effect when a healthy bank closed. This suggests that distressed banks can use informational monopoly power to hold up and exploit their best borrowers. Closures of such banks can release the best-quality firms from the hold-up and allow borrowing cheaper elsewhere.

Contactpersonen

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