Essays on cross-client lending
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2023-02-27
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Schiozer, Rafael Felipe
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Banking relationships are an important feature of a well-functioning financial system because they reduce informational asymmetries. A large share of the previous literature shows that banks lend at more favorable terms to borrowers with a long or good history of payment. This dissertation analyses two types of complementary bank relationships, lending along the supply chain (Chapter 2) and lending to employees of a firm (Chapter 3). Using granular data from the credit bureau, firm-to-firm money transfers and employment registries in Brazil, I find evidence that firms borrow at better terms when their commercial peers or their employees also have a prior relationship with the same lending bank as the firm. Nevertheless, I also present two negative aspects of these cross-client relationships: first, I show that the default by a commercial peer (i.e., an idiosyncratic shock) yields worse loan terms to the firm; second, that banking regulations cannot ignore such connections and their spillovers during a systemic crisis.