Related Lending /
Porta, Rafael La.
Related Lending / Rafael La Porta, Florencio Lopez-de-Silane, Guillermo Zamarripa. - Cambridge, Mass. National Bureau of Economic Research 2002. - 1 online resource: illustrations (black and white); - NBER working paper series no. w8848 . - Working Paper Series (National Bureau of Economic Research) no. w8848. .
March 2002.
In many countries, banks lend to firms controlled by the bank?s owners. We examine the benefits of related lending using a newly assembled dataset for Mexico. Related lending is prevalent (20% of commercial loans) and takes place on better terms than arm?s-length lending (annual interest rates are 4 percentage points lower). Related loans are 33% more likely to default and, when they do, have lower recovery rates (30% less) than unrelated ones. The evidence supports the view that rather than enhance information sharing, related lending is a manifestation of looting.
System requirements: Adobe [Acrobat] Reader required for PDF files.
Mode of access: World Wide Web.
Related Lending / Rafael La Porta, Florencio Lopez-de-Silane, Guillermo Zamarripa. - Cambridge, Mass. National Bureau of Economic Research 2002. - 1 online resource: illustrations (black and white); - NBER working paper series no. w8848 . - Working Paper Series (National Bureau of Economic Research) no. w8848. .
March 2002.
In many countries, banks lend to firms controlled by the bank?s owners. We examine the benefits of related lending using a newly assembled dataset for Mexico. Related lending is prevalent (20% of commercial loans) and takes place on better terms than arm?s-length lending (annual interest rates are 4 percentage points lower). Related loans are 33% more likely to default and, when they do, have lower recovery rates (30% less) than unrelated ones. The evidence supports the view that rather than enhance information sharing, related lending is a manifestation of looting.
System requirements: Adobe [Acrobat] Reader required for PDF files.
Mode of access: World Wide Web.