Joint Size and Ownership Specialization in Bank Lending
43 Pages Posted: 2 Mar 2006
Date Written: February 2006
In this paper we study the specialization of Spanish banks along two interwoven dimensions: size and form of ownership. We find some interesting results at odds with the existing empirical literature. As commercial banks increase their size, they lend more to large borrowers but that is not the case for the largest banks. For savings banks, the larger the size, the more likely they are to lend to small borrowers. Moreover, we find evidence that larger commercial banks are more willing to lend to low credit quality borrowers than medium size banks, while the opposite is true among savings banks. Banks' specialization in lending to business firms seems to go across the reputation considerations, risk shifting behavior and lending technologies most often considered in the literature.
Keywords: bank specialization, transactional lending, relational lending, ownership form
JEL Classification: D23, G21
Suggested Citation: Suggested Citation