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NBER Working Papers and Publications
|October 2006||Relationship Banking and the Pricing of Financial Services|
with Charles Calomiris: w12622
We investigate how banking relationships that combine lending and underwriting services affect the terms of lending, through both loan supply- and loan demand-side effects, and the underwriting costs of debt and equity issues. We capture and control for firm characteristics, including differences in the sequences of firm financing decisions (which we argue are likely to capture important cross-sectional heterogeneity, and which previously have been ignored in the literature). We construct a structural model of lending, which separately identifies loan supply and loan demand. Our approach results in significant improvement in the explanatory power of our regressions when compared to prior studies. We find no evidence that universal banks under-price loans to win underwriting business. Inste...
Published: Charles Calomiris & Thanavut Pornrojnangkool, 2009.
"Relationship Banking and the Pricing of Financial Services,"
Journal of Financial Services Research,
Springer, vol. 35(3), pages 189-224, June.
citation courtesy of
|May 2005||Monopoly-Creating Bank Consolidation? The Merger of Fleet and BankBoston|
with Charles W. Calomiris: w11351
The merger of Fleet and BankBoston in September 1999 resulted in a regional New England lending market in which only one large, universal bank remained. We explore the extent to which that merger resulted in monopoly rents for the combined entity in some niches within the regional loan market. For small- and medium-sized middle-market borrowers, prior to the merger, Fleet and BankBoston charged unusually low loan interest rates, reflecting their ability to realize economies of scope and scale. After the merger, those cost savings were no longer passed on to medium-sized middle-market borrowers, which resulted in an increase in the average interest rate credit spreads to those borrowers of roughly one percent. Small-sized middle-market borrowers (which continued to enjoy the advantage of lo...