We study the impact of a government-mediated takeover of weak small banks by stronger large banks in India during the recent banking crisis on loan performance. Our within borrower-time and between banks tests show a 25% reduction in delinquency. Evidence on mechanisms suggests that borrowers...

We examine the effects of CEO turnover in banks. Incoming bank CEOs face problems from information asymmetry because banks' operations are opaque and bank risk can change dramatically in a short time. Incoming bank CEOs may therefore change bank policies to manage their personal risks. Since CEO...

Though the monetary policy transmission and financial intermediation literatures have respectively highlighted the role of the “bank credit channel” and relationship banking, the effect of relationship banking on the transmission of monitory policy has not been investigated. In this paper,...

We identify ever-greening motivated by loan officer incentives. We devise a novel zombie lending measure in a setting dominated by non-verifiable information. We identify loans that are renewed quickly after repayment of the previous loan, where the same officer is in charge during the issuance...

We ask whether regulatory forbearance on bank loans contributes to deterioration in the governance of borrowing firms. More exposed firms experience a reduction in board independence and external monitoring, an increase in management compensation including transactions with connected entities,...

Programs to direct finance to small firms are ubiquitous. We study their real-side effects for target firms, exploiting the discontinuities in eligibility in such a program in India. We show that small firm lending programs can slow real growth. Several robustness, placebo, heterogeneity, and...

Job rotation, where a principal routinely rotates agents among tasks, is argued to be a powerful antidote for agency problems inside an organization. However, when soft information dominates transactions inside a firm, verifying the information set that led to a particular decision becomes...

We examine the Indian bank asset quality review, which doubled the declared loan delinquency rate. Relative economic stability during the exercise and the absence of a capital backstop together make it unique. We find that the expected reduction in information asymmetry does not automatically...

Programs to direct finance to small firms are ubiquitous. We develop evidence of unexpected side-effects of these programs. Exploiting discontinuities in program eligibility in India’s PSL program, we show that targeted lending programs can slow growth, paradoxically creating financial...