Non-bank lending during crises

Using data for a large sample of countries, this paper shows that non-banks curtail their syndicated lending by significantly more than banks during borrower-country crises. We provide novel evidence that differences in the value of lending relationships explain most of the gap, even when accounting for lender and borrower characteristics. Unlike for banks, relationships with non-banks - whether measured by duration or frequency - do not improve borrowers' access to credit during crises. The rise of non-banks could therefore lead to a shift from relationship towards transaction lending and exacerbate the repercussions of financial shocks.