Determinants of Bank-Firm Lending Relationship: Human Capital Transfer Channel
53 Pages Posted: 17 Sep 2019
Date Written: August 31, 2019
We study the impact of human capital transfer from banks into non-financial firms on firms’ ability to borrow from banks. Using unique, employee-employer matched dataset from Russia, we find that hiring an ex-employee of a bank increases the firm’s likelihood to secure a loan. We establish that this relation is causal by exploiting exogenous local labor market shocks to the supply of bank ex-employees. Notably, former bank managers possess more general human capital compared to ordinary employees: while ordinary bank ex-employees help the firm to borrow from their bank only, bank ex-managers facilitate borrowing from a broader set of banks.
Keywords: bank-firm lending relations, human capital transfer
JEL Classification: G21, G32, J24
Suggested Citation: Suggested Citation