Foreigners vs. Natives

Bank Lending Technologies and Loan Pricing

T.H.L. Beck, V. Ioannidou, L. Schäfer

Research output: Working paperDiscussion paperOther research output

77 Downloads (Pure)

Abstract

Abstract: Do domestic and foreign banks differ in their lending techniques and loan pricing models? Are such differences driven by different clienteles? Using a sample of firms that borrow from both domestic and foreign banks in the same month, we show significant differences in lending techniques and loan pricing. Foreign banks charge lower interest rates, but grant loans at a shorter maturity and are more likely to demand collateral than domestic banks. Foreign banks also base their pricing on credit ratings and collateral pledges, while domestic banks price according to length, depth and breadth of the relationship with the borrower. These findings confirm that foreign and domestic banks can cater to the same clientele but with different lending techniques: foreign banks with transaction-based and domestic banks with relationship-based lending techniques.
Original languageEnglish
Place of PublicationTilburg
PublisherEBC
Number of pages39
Volume2012-014
Publication statusPublished - 2012

Publication series

NameEBC Discussion Paper
Volume2012-014

Fingerprint

Bank lending
Loan pricing
Foreign banks
Lending
Clientele
Loans
Credit rating
Maturity
Interest rates
Pricing
Charge

Keywords

  • Bank Financing
  • Foreign Ownership
  • Lending Technologies
  • Loan Pricing

Cite this

Beck, T. H. L., Ioannidou, V., & Schäfer, L. (2012). Foreigners vs. Natives: Bank Lending Technologies and Loan Pricing. (EBC Discussion Paper; Vol. 2012-014). Tilburg: EBC.
Beck, T.H.L. ; Ioannidou, V. ; Schäfer, L. / Foreigners vs. Natives : Bank Lending Technologies and Loan Pricing. Tilburg : EBC, 2012. (EBC Discussion Paper).
@techreport{27d1ebf0b7f445fa8b3539e488c05a65,
title = "Foreigners vs. Natives: Bank Lending Technologies and Loan Pricing",
abstract = "Abstract: Do domestic and foreign banks differ in their lending techniques and loan pricing models? Are such differences driven by different clienteles? Using a sample of firms that borrow from both domestic and foreign banks in the same month, we show significant differences in lending techniques and loan pricing. Foreign banks charge lower interest rates, but grant loans at a shorter maturity and are more likely to demand collateral than domestic banks. Foreign banks also base their pricing on credit ratings and collateral pledges, while domestic banks price according to length, depth and breadth of the relationship with the borrower. These findings confirm that foreign and domestic banks can cater to the same clientele but with different lending techniques: foreign banks with transaction-based and domestic banks with relationship-based lending techniques.",
keywords = "Bank Financing, Foreign Ownership, Lending Technologies, Loan Pricing",
author = "T.H.L. Beck and V. Ioannidou and L. Sch{\"a}fer",
note = "This is also CentER Discussion Paper 2012-055 Pagination: 39",
year = "2012",
language = "English",
volume = "2012-014",
series = "EBC Discussion Paper",
publisher = "EBC",
type = "WorkingPaper",
institution = "EBC",

}

Beck, THL, Ioannidou, V & Schäfer, L 2012 'Foreigners vs. Natives: Bank Lending Technologies and Loan Pricing' EBC Discussion Paper, vol. 2012-014, EBC, Tilburg.

Foreigners vs. Natives : Bank Lending Technologies and Loan Pricing. / Beck, T.H.L.; Ioannidou, V.; Schäfer, L.

Tilburg : EBC, 2012. (EBC Discussion Paper; Vol. 2012-014).

Research output: Working paperDiscussion paperOther research output

TY - UNPB

T1 - Foreigners vs. Natives

T2 - Bank Lending Technologies and Loan Pricing

AU - Beck, T.H.L.

AU - Ioannidou, V.

AU - Schäfer, L.

N1 - This is also CentER Discussion Paper 2012-055 Pagination: 39

PY - 2012

Y1 - 2012

N2 - Abstract: Do domestic and foreign banks differ in their lending techniques and loan pricing models? Are such differences driven by different clienteles? Using a sample of firms that borrow from both domestic and foreign banks in the same month, we show significant differences in lending techniques and loan pricing. Foreign banks charge lower interest rates, but grant loans at a shorter maturity and are more likely to demand collateral than domestic banks. Foreign banks also base their pricing on credit ratings and collateral pledges, while domestic banks price according to length, depth and breadth of the relationship with the borrower. These findings confirm that foreign and domestic banks can cater to the same clientele but with different lending techniques: foreign banks with transaction-based and domestic banks with relationship-based lending techniques.

AB - Abstract: Do domestic and foreign banks differ in their lending techniques and loan pricing models? Are such differences driven by different clienteles? Using a sample of firms that borrow from both domestic and foreign banks in the same month, we show significant differences in lending techniques and loan pricing. Foreign banks charge lower interest rates, but grant loans at a shorter maturity and are more likely to demand collateral than domestic banks. Foreign banks also base their pricing on credit ratings and collateral pledges, while domestic banks price according to length, depth and breadth of the relationship with the borrower. These findings confirm that foreign and domestic banks can cater to the same clientele but with different lending techniques: foreign banks with transaction-based and domestic banks with relationship-based lending techniques.

KW - Bank Financing

KW - Foreign Ownership

KW - Lending Technologies

KW - Loan Pricing

M3 - Discussion paper

VL - 2012-014

T3 - EBC Discussion Paper

BT - Foreigners vs. Natives

PB - EBC

CY - Tilburg

ER -

Beck THL, Ioannidou V, Schäfer L. Foreigners vs. Natives: Bank Lending Technologies and Loan Pricing. Tilburg: EBC. 2012. (EBC Discussion Paper).