Impact of Banking Competition on Lending Technologies

26 Pages Posted: 20 Jan 2015

See all articles by Jeremie Bertrand

Jeremie Bertrand

EDHEC Business School

Jean-Christophe Statnik

University of Lille II - University of Lille LSMRC & ISA

Date Written: January 19, 2015

Abstract

For the past 20 years, scholars have extensively discussed the impact of banking competition on the choice between transactional and relationship lending technologies, both empirically and theoretically, but have not yet come to a resolution. This study addresses this question using a new approach to relationship lending: a measure of the actual level of soft information banks use at the time of loan pricing. Using this new approach, the authors conclude that banks prefer to implement relationship lending technology when competition is weak. In addition, with regard to the shape of the relationship between competition and relationship banking, they find that, in accordance with extant theoretical conclusions, this relationship is nonlinear and concave.

Keywords: Banks, Lending Technologies, Banking competition, Small Business

JEL Classification: G21, L14

Suggested Citation

Bertrand, Jeremie and Statnik, Jean-Christophe, Impact of Banking Competition on Lending Technologies (January 19, 2015). Available at SSRN: https://ssrn.com/abstract=2551820 or http://dx.doi.org/10.2139/ssrn.2551820

Jeremie Bertrand

EDHEC Business School ( email )

58 rue du Port
Lille, 59046
France

Jean-Christophe Statnik (Contact Author)

University of Lille II - University of Lille LSMRC & ISA ( email )

1, rue de Mulhouse
Lille, 59000
France

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