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20 novembre 2024
- ISIDORE Id: 10670/1.bf90fe...
- hal: hal-04792918
info:eu-repo/semantics/OpenAccess
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Relationship Banking Borrower's Incentives Mortgage Loan COVID-19 Default Risk. JEL Classification: G20 G21 Relationship Banking Borrower's Incentives Mortgage Loan COVID-19 G - Financial Economics G - Financial Economics/G.G2 - Financial Institutions and Services/G.G2.G21 - Banks • Depository Institutions • Micro Finance Institutions • MortgagesCiter ce document
Pejman Abedifar et al., « Relationship Banking: The Borrower's Incentives Channel », HAL SHS (Sciences de l’Homme et de la Société), ID : 10670/1.bf90fe...
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We contribute to the relationship banking literature by uncovering the impact of a prior banking relationship on borrower's incentives to avoid default. As an identification strategy we exploit a proprietary dataset comprising 149,230 mortgage loans tracked monthly over a two-year period in a unique institutional setting that allows us to isolate the influence of borrower's incentives. Our findings indicate that a pre-existing relationship diminishes borrower's default risk by approximately 4%, exclusively attributable to the value of the relationship for the borrowers. This effect persists even during the notable surge in loan defaults during the COVID-19 pandemic. Our results also show that the impact of preexisting banking relationships on avoiding default is stronger for wealthier, more religious, and male borrowers.
