Deposit-Lending Synergies: Evidence from Chinese Students at US Universities
58 Pages Posted: 9 Nov 2018 Last revised: 12 Nov 2018
Date Written: November 7, 2018
This paper exploits an influx of Chinese students to US universities from 2000 through 2014 to study information synergies between banks’ deposit-taking and lending activities. Banks that are more recognizable by Chinese students experience higher deposit inflows and increase their local credit supply. This credit supply expansion only occurs in information sensitive credit markets: small business loans and second lien mortgages. Such increase is also more prominent at locations where managers have greater autonomy. The results support the notion of information synergies between deposits and loans: banks gain information contained in deposit inflows, and utilize it in information-intensive lending markets.
Keywords: Banking, Small Business Loans, Mortgages, Information Synergies
JEL Classification: G21
Suggested Citation: Suggested Citation