Theory suggests that by lending to a firm, inside banks gain an informational advantage over non-lender outside banks. This informational gap hinders borrowers from switching lenders due to a winner's curse faced by competing outside banks, leading to hold-up problems. In this paper, we show...

We find evidence that input suppliers provide credit quality certification to their borrowers. Banks are more likely to lend to firms that have been granted trade credit by their suppliers and to firms that pay higher proportions of their trade credit debts on time. This ‘certification' role...

We examine whether banks use soft information in their lending decisions. To overcome the problem of soft information measurement, we analyze whether publicly available variables that are correlated with the borrowers' credit quality are more significant in explaining the lending decisions of...