Determinants of Bank-Firm Lending Relationship: Human Capital Transfer Channel

Abstract

We study the impact of human capital transfer from banks to non-financial firms on firms’ ability to borrow from banks. Using a unique, employee-employer matched dataset from Russia, we find that hiring an ex-banker increases a firm’s likelihood to secure a bank loan, and the effect is higher when a former bank manager is hired. By exploiting bank branches network restructuring as the source of exogenous shocks to the local supply of bank ex-employees, we establish that this relation is causal. Finally, we present evidence that, when transferring to non- financial firms, ex-bankers bring not only knowledge and connections from their former banks, but also lending-related expertise which is applicable outside of their banks.

Keywords: bank-firm lending relations, human capital transfer

JEL Classification: G21, G32, J24