Abstract

https://ssrn.com/abstract=302128
 
 

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Citations (90)



 


 



Related Lending


Rafael La Porta


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

Florencio Lopez de Silanes


SKEMA Business School; National Bureau of Economic Research (NBER)

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


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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: https://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
SKEMA Business School ( email )
Campus de Lille
Avenue Willy Brandt, Euralille
Lille, 59777
France
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Guillermo Zamarripa
National Banking and Securities Commission, Mexico ( email )
Insurgentes Sur 1971
Mexico D.F., 01020
Mexico
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