Specialization in Bank Lending: Evidence from Exporting Firms

66 Pages Posted: 27 Dec 2021 Last revised: 6 Jul 2022

See all articles by Daniel Paravisini

Daniel Paravisini

London School of Economics & Political Science (LSE)

Veronica Rappoport

London School of Economics & Political Science (LSE)

Philipp Schnabl

New York University (NYU) - Department of Finance; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 3 versions of this paper

Date Written: November 27, 2021

Abstract

We develop an empirical approach for identifying specialization in bank lending with granular data on borrower activities. We use it to analyze export market specialization with loan and export data for all exporters in Peru. We measure a bank's market of specialization using its relative concentration of lending towards exporters to a given country. A bank's country of specialization strongly predicts the correlation between an exporter's credit from the bank and its volume of exports to the country. Also, new borrowers from a specialized bank are more likely to begin exporting to the country of specialization (and vice-versa). Finally, exports demand and credit supply shocks disproportionately affect borrowing from the specialized bank and exports to the specialization country, respectively. The results imply that bank specialization substantially curtails competition and augments the real economy effect of bank credit supply disruptions.

Keywords: Bank specialization, Exports, Within-firm Estimator

JEL Classification: F14, G21

Suggested Citation

Paravisini, Daniel and Rappoport, Veronica and Schnabl, Philipp, Specialization in Bank Lending: Evidence from Exporting Firms (November 27, 2021). Journal of Finance, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3993978 or http://dx.doi.org/10.2139/ssrn.3993978

Daniel Paravisini

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

Veronica Rappoport

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

Philipp Schnabl (Contact Author)

New York University (NYU) - Department of Finance ( email )

Stern School of Business
44 West 4th Street
New York, NY 10012-1126
United States

HOME PAGE: http://pages.stern.nyu.edu/~sternfin/pschnabl/

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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