Abstract

http://ssrn.com/abstract=302128
 
 

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Related Lending


Rafael La Porta


Dartmouth College - Tuck School of Business; National Bureau of Economic Research (NBER)

Florencio Lopez de Silanes


EDHEC Business School; National Bureau of Economic Research (NBER); Tinbergen Institute

Guillermo Zamarripa


National Banking and Securities Commission, Mexico

May 16, 2002

Yale ICF Working Paper No. 02-19

Abstract:     
In many countries, banks lend to firms controlled by the bank's owners. We examine the benefits of related lending using a newly assembled dataset for Mexico. Related lending is prevalent (20% of commercial loans) and takes place on better terms than arm's-length lending (annual interest rates are 4 percentage points lower). Related loans are 33% more likely to default and, when they do, have lower recovery rates (30% less) than unrelated ones. The evidence supports the view that rather than enhance information sharing, related lending is a manifestation of looting.

Number of Pages in PDF File: 35

JEL Classification: G3, G2

working papers series


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Date posted: March 31, 2002  

Suggested Citation

La Porta, Rafael and Lopez de Silanes, Florencio and Zamarripa, Guillermo, Related Lending (May 16, 2002). Yale ICF Working Paper No. 02-19. Available at SSRN: http://ssrn.com/abstract=302128 or http://dx.doi.org/10.2139/ssrn.302128

Contact Information

Rafael La Porta (Contact Author)
Dartmouth College - Tuck School of Business ( email )
Hanover, NH 03755
United States
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Florencio Lopez de Silanes
EDHEC Business School ( email )
393, Promenade des Anglais BP 3116
Nice, 06202
France
+33 (0) 4 93 18 78 07 (Phone)
+33 (0) 4 93 18 78 41 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Tinbergen Institute ( email )
Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands
Guillermo Zamarripa
National Banking and Securities Commission, Mexico ( email )
Insurgentes Sur 1971
Mexico D.F., 01020
Mexico
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