Banks of a feather: The informational advantage of being alike

Arbeitspapier

Banks lend more to banks that are similar to them. Using data from the German credit register and proprietary supervisory data on the quality of banks' loan portfolio, we show that a similar portfolio of the lending and borrowing bank helps to overcome information asymmetries in interbank markets. While interbank lenders generally do not adjust their lending to information on the counterparty's portfolio quality, banks with an exposure to similar industries and regions strongly react to this private information. Lending between similar banks is particularly important for borrowers with an opaque loan portfolio, which do not obtain credit from dissimilar peers.

Object Details

• ISBN: 978-3-95729-940-6
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Deutsche Bundesbank Discussion Paper ; No. 09/2023

Classification and Topics

• Classification: Wirtschaft ; Monetary Policy, Central Banking, and the Supply of Money and Credit: General ; Portfolio Choice; Investment Decisions ; Financial Institutions and Services: General ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages
• Subject: Peer monitoring ; interbank markets ; asymmetric information ; portfolio quality ; portfolio similarity ; systemic risk and contagion

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bednarek, Peter ; Dinger, Valeriya ; Schultz, Alison ; von Westernhagen, Natalja
• Event: Veröffentlichung
• (who): Deutsche Bundesbank
• (where): Frankfurt a. M.
• (when): 2023

Further information

• Handle: http://hdl.handle.net/10419/273721
• Last update: 10.03.2025, 11:44 AM CET