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Relationship lending in Peru

Author

Listed:
  • Tomarchio, Alessandro

    (Banco Central de Reserva del Perú)

Abstract

This paper studies whether the strength of bank-firm relationships has an impact on credit conditions, particularly during a stress scenario such as COVID-19 crisis. Using the Peruvian credit registry, we find that firms get better credit conditions (higher credit line and loan size growth, lower interest rate growth) in the institution where they have a stronger bond, measured by years of relationship, geographical proximity to a branch and share of credit. Furthermore, those effects are stronger compared to a pre-COVID scenario and heterogeneous depending on firm characteristics. We also find a positive effect of our relationship lending indices on the probability of getting Reactiva loans and loan rescheduling, and on the growth rate of the number of employees.

Suggested Citation

  • Tomarchio, Alessandro, 2022. "Relationship lending in Peru," Working Papers 2022-010, Banco Central de Reserva del Perú.
    • Handle: RePEc:rbp:wpaper:2022-010
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    File URL: https://www.bcrp.gob.pe/docs/Publicaciones/Documentos-de-Trabajo/2022/documento-de-trabajo-010-2022.pdf
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    More about this item

    Keywords

    relationship lending; credit supply; COVID-19;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers

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