The Impact of Competition on Bank Orientation and Specialization

H.A. Degryse; S. Ongena

The Impact of Competition on Bank Orientation and Specialization

H.A. Degryse
, S. Ongena

Research output: Working paper › Discussion paper › Other research output

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Abstract

How do banks react to increased interbank competition?Recent banking theory offers conflicting predictions about the impact of competition on bank orientation í L H WKH choice of relationship based versus transactional banking í DQG EDQN LQGXVWU\ specialization.We empirically investigate the impact of interbank competition on bank branch orientation and specialization.We employ a unique data set containing detailed information on bank-firm relationships and industry classification.We find that bank branches facing stiff local competition engage relatively more in relationship-based lending but specialize somewhat less in a particular industry.Our results illustrate that competition and relationships are not necessarily inimical.

Original language	English
Place of Publication	Tilburg
Publisher	Finance
Number of pages	59
Volume	2003-108
Publication status	Published - 2003

Publication series

Name	CentER Discussion Paper
Volume	2003-108

Keywords

competition
banks
bank lending

UN SDGs

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title = "The Impact of Competition on Bank Orientation and Specialization",

abstract = "How do banks react to increased interbank competition?Recent banking theory offers conflicting predictions about the impact of competition on bank orientation {\'i} L H WKH choice of relationship based versus transactional banking {\'i} DQG EDQN LQGXVWU\textbackslash{} specialization.We empirically investigate the impact of interbank competition on bank branch orientation and specialization.We employ a unique data set containing detailed information on bank-firm relationships and industry classification.We find that bank branches facing stiff local competition engage relatively more in relationship-based lending but specialize somewhat less in a particular industry.Our results illustrate that competition and relationships are not necessarily inimical.",

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AU - Ongena, S.

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N2 - How do banks react to increased interbank competition?Recent banking theory offers conflicting predictions about the impact of competition on bank orientation í L H WKH choice of relationship based versus transactional banking í DQG EDQN LQGXVWU\ specialization.We empirically investigate the impact of interbank competition on bank branch orientation and specialization.We employ a unique data set containing detailed information on bank-firm relationships and industry classification.We find that bank branches facing stiff local competition engage relatively more in relationship-based lending but specialize somewhat less in a particular industry.Our results illustrate that competition and relationships are not necessarily inimical.

AB - How do banks react to increased interbank competition?Recent banking theory offers conflicting predictions about the impact of competition on bank orientation í L H WKH choice of relationship based versus transactional banking í DQG EDQN LQGXVWU\ specialization.We empirically investigate the impact of interbank competition on bank branch orientation and specialization.We employ a unique data set containing detailed information on bank-firm relationships and industry classification.We find that bank branches facing stiff local competition engage relatively more in relationship-based lending but specialize somewhat less in a particular industry.Our results illustrate that competition and relationships are not necessarily inimical.

KW - competition

KW - banks

KW - bank lending

M3 - Discussion paper

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T3 - CentER Discussion Paper

BT - The Impact of Competition on Bank Orientation and Specialization

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CY - Tilburg

ER -

The Impact of Competition on Bank Orientation and Specialization

Abstract

Publication series

Keywords

UN SDGs

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