Pub Date : 2025-04-26DOI: 10.1016/j.jfi.2025.101150
Allen N. Berger , Christa H.S. Bouwman , Lars Norden , Raluca A. Roman , Gregory F. Udell , Teng Wang
We challenge the existing relationship lending literature on how banks manage their relationships with corporate borrowers during crises. We test theories of intertemporal smoothing during the closure period of the COVID-19 crisis when borrowers are in great need of relationship benefits. We find that relationship borrowers receive worse rather than more favorable loan contract terms than others during this period. These and other results provide novel evidence on the functioning of relationship lending during a pandemic and contrast existing evidence gleaned from banking and financial crises.
{"title":"Is a friend in need a friend indeed? How relationship borrowers fare during the COVID-19 crisis","authors":"Allen N. Berger , Christa H.S. Bouwman , Lars Norden , Raluca A. Roman , Gregory F. Udell , Teng Wang","doi":"10.1016/j.jfi.2025.101150","DOIUrl":"10.1016/j.jfi.2025.101150","url":null,"abstract":"<div><div>We challenge the existing relationship lending literature on how banks manage their relationships with corporate borrowers during crises. We test theories of intertemporal smoothing during the closure period of the COVID-19 crisis when borrowers are in great need of relationship benefits. We find that relationship borrowers receive worse rather than more favorable loan contract terms than others during this period. These and other results provide novel evidence on the functioning of relationship lending during a pandemic and contrast existing evidence gleaned from banking and financial crises.</div></div>","PeriodicalId":51421,"journal":{"name":"Journal of Financial Intermediation","volume":"63 ","pages":"Article 101150"},"PeriodicalIF":3.1,"publicationDate":"2025-04-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143916766","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper investigates the impact of the first system-wide capital relief package adopted by euro area prudential authorities, to support bank lending to firms at the outbreak of the COVID-19 pandemic. By leveraging confidential supervisory and credit register data, we uncover two main findings. First, capital relief measures support banks’ capacity to supply credit to firms. Second, the type of relief matters. Banks increase their credit supply in response to measures that reduce binding capital requirements and affect banks’ ability to distribute dividends. By contrast, discretionary relief measures that do not affect dividend policy are met with limited success. Moreover, requirement releases are more effective for banks with ex-ante lower capital headroom and for lending to smaller firms. These findings provide novel insights on the design of effective bank capital requirement releases in crisis times and, more generally, of policies to support bank credit in times of economic distress.
{"title":"How to release capital requirements in an economic downturn? Evidence from euro area credit register","authors":"Cyril Couaillier , Alessio Reghezza , Costanza Rodriguez d’Acri , Alessandro Scopelliti","doi":"10.1016/j.jfi.2025.101148","DOIUrl":"10.1016/j.jfi.2025.101148","url":null,"abstract":"<div><div>This paper investigates the impact of the first system-wide capital relief package adopted by euro area prudential authorities, to support bank lending to firms at the outbreak of the COVID-19 pandemic. By leveraging confidential supervisory and credit register data, we uncover two main findings. First, capital relief measures support banks’ capacity to supply credit to firms. Second, the type of relief matters. Banks increase their credit supply in response to measures that reduce binding capital requirements and affect banks’ ability to distribute dividends. By contrast, discretionary relief measures that do not affect dividend policy are met with limited success. Moreover, requirement releases are more effective for banks with ex-ante lower capital headroom and for lending to smaller firms. These findings provide novel insights on the design of effective bank capital requirement releases in crisis times and, more generally, of policies to support bank credit in times of economic distress.</div></div>","PeriodicalId":51421,"journal":{"name":"Journal of Financial Intermediation","volume":"63 ","pages":"Article 101148"},"PeriodicalIF":3.1,"publicationDate":"2025-04-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143948663","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-04-16DOI: 10.1016/j.jfi.2025.101145
Lantian Liang , Harold H. Zhang , Feng Zhao , Xiaofei Zhao
Utilizing a unique and novel setting of disclosure mandate threshold under Regulation AB (Reg AB), we investigate the relationship between disclosure and trust in asset securitization. Post-Reg AB enactment, we observe a significant bunching of originators just below the disclosure threshold. Less trustworthy originators are more likely to adjust their portfolio sizes to remain below this threshold, particularly when loan originators and deal sponsors are unaffiliated, which are cases in which disclosure plays a greater role in reducing information asymmetry. Additionally, these originators are more likely to misrepresent loan quality. Our findings reveal a strong relationship between disclosure and trust—trustworthy originators disclose more and originate higher-quality loans, while less trustworthy originators disclose less and produce lower-quality loans.
{"title":"Disclosure mandate, trust, and asset securitization","authors":"Lantian Liang , Harold H. Zhang , Feng Zhao , Xiaofei Zhao","doi":"10.1016/j.jfi.2025.101145","DOIUrl":"10.1016/j.jfi.2025.101145","url":null,"abstract":"<div><div>Utilizing a unique and novel setting of disclosure mandate threshold under Regulation AB (Reg AB), we investigate the relationship between disclosure and trust in asset securitization. Post-Reg AB enactment, we observe a significant bunching of originators just below the disclosure threshold. Less trustworthy originators are more likely to adjust their portfolio sizes to remain below this threshold, particularly when loan originators and deal sponsors are unaffiliated, which are cases in which disclosure plays a greater role in reducing information asymmetry. Additionally, these originators are more likely to misrepresent loan quality. Our findings reveal a strong relationship between disclosure and trust—trustworthy originators disclose more and originate higher-quality loans, while less trustworthy originators disclose less and produce lower-quality loans.</div></div>","PeriodicalId":51421,"journal":{"name":"Journal of Financial Intermediation","volume":"63 ","pages":"Article 101145"},"PeriodicalIF":3.1,"publicationDate":"2025-04-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143877386","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-04-01DOI: 10.1016/j.jfi.2025.101147
Mustafa Emin , Christopher James , Tao Li
Following the global financial crisis, banks lengthened the average maturity of their assets relative to that of their liabilities, principally by increasing their investments in mortgage-related assets. Whether such maturity transformation exposes banks to interest rate risk depends, in part, on the effectiveness of bank deposits as a hedge against interest rate shocks. In this paper we provide evidence that interest pass-through rates on deposits vary significantly with interest rates, which reduces the effectiveness of deposits as a hedge when interest rates increase. The dynamic nature of the deposit betas explains, in part, why the duration of bank equity varies with interest rates and why interest rate risk models need to account for how pass-through rates vary with interest rates.
{"title":"Variable deposit betas and bank exposure to interest rate risk","authors":"Mustafa Emin , Christopher James , Tao Li","doi":"10.1016/j.jfi.2025.101147","DOIUrl":"10.1016/j.jfi.2025.101147","url":null,"abstract":"<div><div>Following the global financial crisis, banks lengthened the average maturity of their assets relative to that of their liabilities, principally by increasing their investments in mortgage-related assets. Whether such maturity transformation exposes banks to interest rate risk depends, in part, on the effectiveness of bank deposits as a hedge against interest rate shocks. In this paper we provide evidence that interest pass-through rates on deposits vary significantly with interest rates, which reduces the effectiveness of deposits as a hedge when interest rates increase. The dynamic nature of the deposit betas explains, in part, why the duration of bank equity varies with interest rates and why interest rate risk models need to account for how pass-through rates vary with interest rates.</div></div>","PeriodicalId":51421,"journal":{"name":"Journal of Financial Intermediation","volume":"62 ","pages":"Article 101147"},"PeriodicalIF":3.1,"publicationDate":"2025-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143842648","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-04-01DOI: 10.1016/j.jfi.2025.101144
David Glancy , Robert Kurtzman , Lara Loewenstein
Loan modifications can ease borrowers’ financial burdens and mitigate loan losses. However, the threat of future strategic renegotiation may cause lenders to tighten ex-ante credit provision. We evaluate this trade-off in a dynamic model of loan underwriting with frictional renegotiation and calibrate it using loan-level CRE data from banks and CMBS. We find that modification frictions can rationalize a number of empirical facts regarding how CRE loan underwriting and performance differ across lenders. Key to this result, high frictions to modifying CMBS loans reduce renegotiation, increase debt capacity, and cause high-leverage-demand borrowers to select into the CMBS market. Consequently, easing CMBS modification frictions reduces welfare by restricting the menu of LTVs available in the market.
{"title":"The value of renegotiation frictions: Evidence from commercial real estate","authors":"David Glancy , Robert Kurtzman , Lara Loewenstein","doi":"10.1016/j.jfi.2025.101144","DOIUrl":"10.1016/j.jfi.2025.101144","url":null,"abstract":"<div><div>Loan modifications can ease borrowers’ financial burdens and mitigate loan losses. However, the threat of future strategic renegotiation may cause lenders to tighten ex-ante credit provision. We evaluate this trade-off in a dynamic model of loan underwriting with frictional renegotiation and calibrate it using loan-level CRE data from banks and CMBS. We find that modification frictions can rationalize a number of empirical facts regarding how CRE loan underwriting and performance differ across lenders. Key to this result, high frictions to modifying CMBS loans reduce renegotiation, increase debt capacity, and cause high-leverage-demand borrowers to select into the CMBS market. Consequently, easing CMBS modification frictions reduces welfare by restricting the menu of LTVs available in the market.</div></div>","PeriodicalId":51421,"journal":{"name":"Journal of Financial Intermediation","volume":"62 ","pages":"Article 101144"},"PeriodicalIF":3.1,"publicationDate":"2025-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143874552","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-02-17DOI: 10.1016/j.jfi.2025.101143
Franklin Allen , João A.C. Santos
{"title":"Introduction to virtual special issue in honor of Douglas Gale","authors":"Franklin Allen , João A.C. Santos","doi":"10.1016/j.jfi.2025.101143","DOIUrl":"10.1016/j.jfi.2025.101143","url":null,"abstract":"","PeriodicalId":51421,"journal":{"name":"Journal of Financial Intermediation","volume":"62 ","pages":"Article 101143"},"PeriodicalIF":3.1,"publicationDate":"2025-02-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143419456","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-02-11DOI: 10.1016/j.jfi.2025.101141
Syngjoo Choi , Marco Cipriani , Antonio Guarino , Shachar Kariv
{"title":"Douglas Gale’s contribution to social learning, decision under risk and uncertainty, monotone games and networks","authors":"Syngjoo Choi , Marco Cipriani , Antonio Guarino , Shachar Kariv","doi":"10.1016/j.jfi.2025.101141","DOIUrl":"10.1016/j.jfi.2025.101141","url":null,"abstract":"","PeriodicalId":51421,"journal":{"name":"Journal of Financial Intermediation","volume":"62 ","pages":"Article 101141"},"PeriodicalIF":3.1,"publicationDate":"2025-02-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143437006","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-02-06DOI: 10.1016/j.jfi.2025.101139
Piero Gottardi
{"title":"Douglas Gale’s contribution to bargaining and markets","authors":"Piero Gottardi","doi":"10.1016/j.jfi.2025.101139","DOIUrl":"10.1016/j.jfi.2025.101139","url":null,"abstract":"","PeriodicalId":51421,"journal":{"name":"Journal of Financial Intermediation","volume":"62 ","pages":"Article 101139"},"PeriodicalIF":3.1,"publicationDate":"2025-02-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143373105","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-30DOI: 10.1016/j.jfi.2025.101142
Ernst-Ludwig von Thadden
No abstract required
不需要摘要
{"title":"Douglas Gale's contribution to money and equilibrium","authors":"Ernst-Ludwig von Thadden","doi":"10.1016/j.jfi.2025.101142","DOIUrl":"10.1016/j.jfi.2025.101142","url":null,"abstract":"<div><div>No abstract required</div></div>","PeriodicalId":51421,"journal":{"name":"Journal of Financial Intermediation","volume":"62 ","pages":"Article 101142"},"PeriodicalIF":3.1,"publicationDate":"2025-01-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143101396","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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