In this paper we analyze the effects of adverse selection due to asymmetric information on the optimizing behavior of risk neutral firms and banks in a competitive loan market. Realized film returns have the monotone likelihood ratio property (MLRP) with respect to quality, in the sense of...

One of the most evident consequences of the Great Financial Crisis has been a rapid expansion of banking regulation. We argue that the burden of the new regulatory system is asymmetric, driving small banks to the "too-small-to-survive" zone, while reinforcing the "too-big-to-fail" protection for...

Recent empirical findings by Elsas (2005) and Degryse and Ongena (2007) document a U-shaped effect of market concentration on relationship lending which cannot be easily accommodated by the investment and strategic theories of relationship lending. In this paper, we suggest that this...

A puzzling but consistent result in the empirical literature on banking is that firms with close bank ties do not grow faster than bank-independent firms. In this paper, we reconsider the link between relationship lending and firms' growth, distinguishing firms by size and 'health'. The idea is...

For many countries, remittance behaviour by migrants is an important component of their overall international financial flows. To date, the empirical literature has analysed the propensity to remit as a function of migrants' socio-economic characteristics. However, no studies have fully...

Over the last ten years there have been great strides made in the analysis of the regional structure of banking systems and financial integration both from the theoretical and empirical point of view. Experience shows that the financial structure tends to be hierarchical with an advanced...

In this paper we empirically test the recent lender-based theory for the use of collateral in bank lending. Based on a proprietary dataset of loan contracts written by a local bank in competitive credit markets, we use the physical proximity between borrowers and the lending branch of the bank...

Academic research recognizes that the organizational structure of banks could have implications for the financing of small businesses and entrepreneurial firms. In this chapter, we start by reviewing the underlying theoretical motivation and then summarize existing evidence. Overall, it is...

In this paper we look at the effect of International Monetary Fund (IMF) lending programs on banking crises in a large sample of developing countries, over the period 1965-2010. The endogeneity of the Fund intervention is addressed by adopting an instrumental variable (IV) strategy, in which the...

In this paper we explore the effects of bank-borrower physical proximity on price and non-price aspects of small business lending in local credit markets. Along the price dimension, our analysis reveals that interest rates increase with bank-borrower distance and decrease with the distance...