Non-bank Lending During Crises

Abstract

This paper shows that non-banks curtail their syndicated credit by significantly more than banks during crises, even after accounting for time-varying lender and borrower characteristics. We provide novel evidence that differences in the value of lending relationships explain most of the gap: unlike for banks, relationships with non-banks - whether measured by duration or intensity - do not improve borrowers' access to credit during crises. The rise of non-banks could therefore lead to a shift from relationship towards transaction lending and exacerbate the repercussions of financial crises.

Keywords: Non-banks, syndicated loans, financial crises, financial stability, relationship lending

JEL Classification: F34, G01, G21, G23