Better the devil you know: Home and sectoral biases in bank lending

Aurore Burietz (1) , Loredana Ureche-Rangau (2)

1 LEM - Lille économie management - UMR 9221
2 CRIISEA - Centre de Recherche sur les Institutions, l'Industrie et les Systèmes Économiques d'Amiens - UR UPJV 3908

This paper empirically investigates banks’ lending and the extent to which they are influenced by specific preferences in terms of geographical location and industry. We study whether banks develop a field of expertise and focus on it, or whether they prefer to grant loans quite evenly among countries and industries. We manually built an original database of syndicated loans for banks in the four major banking systems in the eurozone, to estimate the determinants of loans’ amounts between 2005 and 2013. Our findings highlight a domestic bias and a sectoral bias with banks lending larger amounts to their domestic borrowers and to industries they are more familiar with.

Mots clés: Credit supply; Biases; Syndicated loan market

Domaines: Sciences de l'Homme et Société; Gestion et management

Aurore Burietz, Loredana Ureche-Rangau. Better the devil you know: Home and sectoral biases in bank lending. International Economics, 2020, 164, pp.69-85. ⟨10.1016/j.inteco.2020.08.004⟩. ⟨hal-03132835⟩