Eventi del
20 2019 12:15 - 13:45
Meeting Room 5.b3.sr01 - via Roentgen, 1
Lifting the Banking Veil: Credit Standards' Harmonization through Lending Transparency
Maria LOUMIOTI, UT Dallas
ABSTRACT
We explore whether transparency in banks’ lending activities enhances the harmonization of credit terms a bank offers across its different geographic regions. We take advantage of a novel loan-level reporting initiative mandated by the European Central Bank, which requires repo borrowing banks that pledge their asset-backed securities as collateral to disclose granular and standardized information on loan characteristics and performance. We find that loans originated under the transparency regime share more similar interest rates, loan-to-collateral value ratio and maturity compared to same-purpose loans issued by the same bank in different regions. Underperforming local branches and those with less easily accessible benchmark regions experience greater convergence in their credit terms, suggesting that transparency facilitates learning across branches in the different geographic regions in which a bank operates. Additionally, banks that face stronger regulatory scrutiny are more likely to alleviate credit term disparities under the transparency regime. Overall, our findings suggest that transparency enhances within-bank harmonization of lending practices.