Do banks discriminate sectoral real investment?

Maudos, Joaquin and Pérez, Francisco and Quesada, Javier (2005): Do banks discriminate sectoral real investment? Published in: Revue Bancaire et Financière No. 2005/7 (2005): pp. 444-456.

Abstract

Using new sectoral data on Spanish capital stock, real investment and credit we check for the presence of bank preferences for lending to particular branches of the economy. We show that these subsectors share specific characteristics in the levels and components of their cost of use of capital. We find a “preferred habitat” for banks in three sectors: Housing, Real Estate and Construction. Also, commercial banks appear to be more sensitive towards credit demand by nonfinancial firms than savings banks. The latter ones concentrate their lending into the three sectors mentioned above.

• Item Type: MPRA Paper
• Language: English
• Keywords: Real investments, bank credit, mismatch
• Subjects: G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages

References

Bolton, P. & Scharfstein, D. (1990) A theory of predation based on agency problems in financial contracting, American Economic Review, 80 (1), 93--106.

Boot, A., Thakor, A. & Udell, G. (1991) Credible commitments, contract enforcement problems and banks: intermediation as credible insurance, Journal of Banking and Finance, 15, 605--632.

Diamond, D. (1991) Monitoring and reputation: the choice between bank loans and directly placed debt, Journal of Political Economy, 99, pp. 689--721.

Faulkender, M. & Petersen, M. A. (2003) Does the source of capital affect capital structure?, Working Paper n. 9930, National Bureau of Economic Research, Cambridge, Massachusetts.

Freixas, X. & Rochet, J.C. (1997) Macroeconomics of Banking, Massachusetts Institute of Technology.

Gorton, G. & Kahn, J. (1993) The design of bank loan contracts, collateral, and renegotiation, Working Paper n. 4273, National Bureau of Economic Research, Cambridge, Massachusetts.

Jiménez, G. & Saurina, J. (2004) Collateral, type of lender and relationship banking as determinants of credit risk, Journal of Banking and Finance, 28(9), 2191--2212.

Mas M., Pérez F., & Uriel E. (2004) El stock de capital en la Economía Española 1964-2002. Nueva Metodología, Fundación BBVA, Bilbao, forthcoming.

Myerson, R. (1979) Incentive compatibility and the bargaining problem, Econometrica, 47 (1), 61--73.

OECD (2001a) Measuring Capital, Paris.

OECD (2001b) Measuring Productivity, Paris.

Rajan, R.G. (1992) Insiders and outsiders: the choice between informed and arm’s length debt, Journal of Finance, 47 (4), 1367--1400.

Sharpe, S. (1990) Asymmetric Information, Bank Lending and Implicit Contracts: A Stilized Model of Customer Relationships, Journal of Finance, 45 (4) 1069--1087.

Vigdor,J.L. (2004) Liquidity Constraints and Housing Prices: Theory and Evidence from the VA Mortgage Program, Working Paper n. 10611, National Bureau of Economic Research, Cambridge, Massachusetts.