Commercial lending concentration and bank expertise: Evidence from borrower financial statements
Name
Sutherland_Commercial lending.pdf
Description
Submitted version
Size
760.63 KB
Format
Adobe PDF
Checksum (MD5)
3804e4e9f27e243bc4c5077fddbb5a6a
Author(s)
Berger, Philip G.
Minnis, Michael
Sutherland, Andrew Gordon
Date Issued
November 2017
Journal
Journal of Accounting and Economics
Publisher
Elsevier BV
Citation
Berger, Philip G. et al. "Commercial lending concentration and bank expertise: Evidence from borrower financial statements." Journal of Accounting and Economics 64, 2-3 (November 2017): 253-277 © 2017 Elsevier B.V.
Version
Original manuscript
Abstract
Lending concentration features prominently in models of information acquisition by banks, but empirical evidence on its role is limited. Using bank-level loan exposures, we find banks are less likely to collect audited financial statements from firms in industries and regions in which they have more exposure. These findings are stronger in settings in which adverse selection is acute and muted when the bank lacks experience with an exposure. Our results offer novel evidence on how bank characteristics are related to the type of financial information they use and support theoretical predictions suggesting portfolio concentration reveals a bank's relative expertise.
MIT Department
Sloan School of Management
Terms of Use
Creative Commons Attribution-NonCommercial-NoDerivs License
Persistent DSpace Link
DOI of Published Version
https://doi.org/10.1016/j.jacceco.2017.06.005
