Hometown Lending

Lim, Ivan; Nguyen, Duc Duy

Abstract

Banks open more branches and make more lending near their Chief Executive Officers’ (CEOs) childhood hometowns. The effects are stronger among informationally opaque borrowers and among CEOs who spend more time in their childhood hometowns. Furthermore, loans originated near CEOs’ hometowns contain more soft information and have lower ex-post default rates, implying that hometown loans are more informed. Hometown lending does not affect aggregate bank outcomes, suggesting that credit is being reallocated from regions located farther away to regions proximate to bank CEOs’ hometowns.

Citation

Lim, I., & Nguyen, D. D. (2021). Hometown Lending. Journal of Financial and Quantitative Analysis, 56(8), 2894-2933. https://doi.org/10.1017/s0022109020000769

• Journal Article Type: Article
• Acceptance Date: Jul 22, 2020
• Publication Date: 2021-12
• Deposit Date: Sep 29, 2020
• Publicly Available Date: Sep 29, 2020
• Journal: Journal of Financial and Quantitative Analysis
• Print ISSN: 0022-1090
• Electronic ISSN: 1756-6916
• Publisher: Cambridge University Press
• Peer Reviewed: Peer Reviewed
• Volume: 56
• Issue: 8
• Pages: 2894-2933
• DOI: https://doi.org/10.1017/s0022109020000769
• Public URL: https://durham-repository.worktribe.com/output/1260821