Soft Information and Loan Supply in the Crisis: Evidence from the Credit Files of a Large Bank
Rivista Bancaria - Minerva Bancaria No. 5-6/2011
19 Pages Posted: 12 Feb 2012
Date Written: February 12, 2012
Using a large database built from the credit files of UniCredit we focus on loans to small businesses at the peak of the crisis. We study the determinants of the worsening of financial tension up to March 2009 for those customers experiencing (or close to) financial tension already at the end of December 2008. We find that, controlling for internal ratings, financial tension less likely worsened for the customers enjoying a longer-term relationship. This evidence suggests that during the crisis this large bank used soft information to shift its loan supply toward borrowers with lower ex ante asymmetries of information.
Keywords: Financial crisis, Bank-firm relationships, Asymmetric information, Soft information, Small business finance
JEL Classification: D82, G21, G30, O16
Suggested Citation: Suggested Citation