Relationship Banking: The Borrower's Incentives Channel - Archive ouverte HAL
Pré-Publication, Document De Travail Année : 2024

Relationship Banking: The Borrower's Incentives Channel

Pejman Abedifar
  • Fonction : Auteur
Soroush Kamyab
  • Fonction : Auteur
  • PersonId : 1444469
Steven Ongena
  • Fonction : Auteur
  • PersonId : 1444470

Résumé

We contribute to the relationship banking literature by uncovering the impact of a prior banking relationship on borrower's incentives to avoid default. As an identification strategy we exploit a proprietary dataset comprising 149,230 mortgage loans tracked monthly over a two-year period in a unique institutional setting that allows us to isolate the influence of borrower's incentives. Our findings indicate that a pre-existing relationship diminishes borrower's default risk by approximately 4%, exclusively attributable to the value of the relationship for the borrowers. This effect persists even during the notable surge in loan defaults during the COVID-19 pandemic. Our results also show that the impact of pre-existing banking relationships on avoiding default is stronger for wealthier, more religious, and male borrowers.
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Dates et versions

hal-04793051 , version 1 (20-11-2024)

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  • HAL Id : hal-04793051 , version 1

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Pejman Abedifar, Soroush Kamyab, Steven Ongena, Amine Tarazi. Relationship Banking: The Borrower's Incentives Channel. 2024. ⟨hal-04793051⟩
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