This paper studies relationship lending in a framework where the cost of switching banks measures the degree of banking … competition. The relationship lender’s (insider bank’s) informational advantage creates a lock-in effect, which is at its height … problem, and outsider banks are thus reluctant to make overly aggressive bids. This effect gradually fades as the magnitude of …

characteristics, such as capital and liquidity. We estimate the new model on the entire panel of US banks, spanning the period 1985q1 … establish that the risk of the relatively large banks and banks that failed in the subprime crisis is higher than the industry …’s average. Thus, we provide a new leading indicator, which is able to forecast future solvency problems of banks. …

Whether or not banks are engaged in ex ante monitoring of customers may have important consequences for the whole … economy. We approach this question via a model in which banks can invest in either information acquisition or market power … local banks. We find evidence that banks’ investments in branch networks and human capital (personnel) contribute to …