Big Broad Banks: How Does Cross-Selling Affect Lending?

60 Pages Posted: 16 Apr 2021 Last revised: 25 Jan 2023

See all articles by Yingjie Qi

Yingjie Qi

Copenhagen Business School

Date Written: April 20, 2021


This paper investigates how cross-selling affects relationship lending with internal data of a large bank and the Swedish credit registry. I show that within a bank-firm relationship, profit earned from non-loan products cross-subsidizes loans and increases 1) credit supply and 2) lenience in delinquency. For identification, I exploit the Basel II-induced exogenous variation in products' profitability while holding constant the firms' creditworthiness and relationship informativeness. I find that the average affected firms experienced a decrease of 6.1% ($400,000) in credit supply and 24% (9.9 pp) in lenience in delinquency. The results inform optimal regulatory design for lenders who multi-produce.

Keywords: cross-subsidization, relationship banking, cross-selling, credit allocation, debt renegotiation

JEL Classification: G20, G21, G28

Suggested Citation

Qi, Yingjie, Big Broad Banks: How Does Cross-Selling Affect Lending? (April 20, 2021). Available at SSRN: or

Yingjie Qi (Contact Author)

Copenhagen Business School ( email )

Solbjerg Plads 3
Frederiksberg C, DK - 2000

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