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Hometown Lending

Lim, Ivan; Nguyen, Duc Duy

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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

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