TY  - JOUR
AU  - Porta,Rafael La
AU  - Lopez-de-Silane,Florencio
AU  - Zamarripa,Guillermo
TI  - Related Lending
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8848
PY  - 2002
Y2  - March 2002
UR  - http://www.nber.org/papers/w8848
L1  - http://www.nber.org/papers/w8848.pdf
N1  - Author contact info:
Rafael La Porta
Dartmouth College
Tuck School
210 Tuck Hall
Hanover, NH  03755
Tel: 603/646-3739
E-Mail: rafael.laporta@dartmouth.edu

Florencio Lopez-de-Silanes
EDHEC Business School
393, Promenade des Anglais BP 3116
06202 Nice Cedex 3
FRANCE
Tel: +33 (0) 4 93 18 78 07
Fax: +33 (0) 4 93 18 78 41
E-Mail: Florencio.lopezdesilanes@edhec.edu
AB  - 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.
ER  -