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

Abstract

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