Abstract: Using data on the US syndicated loan market, we show that banks specialize in lending towards specific industrial sectors. Specialization is persistent over time and common across industries. This contrasts naive interpretations of classical theories of financial intermediation built upon portfolio diversification. Using detailed information on credit agreements, we show that the typical loan contract between a bank specialized in an industry and a firm in the same industry has less restrictive covenants and lower spreads. This, with respect to a loan arranged by the same bank, at the same time, to a firm in another industry in which the bank is not specialized in. This result cannot be fully explained by relationship lending, high propensity to internalize spillovers from credit decisions within an industry, or geographical proximity. Interpreting our findings in light of the information theory of covenants, we suggest that the lending advantage associated with bank specialization is likely to stem from an information advantage in screening and monitoring.
Instructor, The Wharton School
• FNCE 101/613 – Monetary Economics & Global Economy (Undergrad/MBA)
Teaching Assistant, The Wharton School
• FNCE 101/613 – Monetary Economics & Global Economy (Undergrad/MBA), Dr. T. Shabbir
• FNCE 232/732 – International Banking (Undergrad/MBA), Prof. Richard Herring
• FNCE 615 – Introduction to Macroeconomics (MBA), Prof. João Gomes
• FNCE 726 – Advanced Corporate Finance (MBA), Prof, Bulent Gultekin
• WH 299/399 – Wharton Honors Thesis (Undergrad), Prof. Utsav Schurmans
Research Grant, Rodney L. White Center for Financial Research
Mack Institute Research Fellowship, Mack Institute for Innovation Management
Research Grant, Wharton Political Risk Lab
PhD Fellowship, The Wharton School, University of Pennsylvania. 2016 – 2021.
Bonaldo Stringher Fellowship, nominated “Particularly Deserving”, Bank of Italy. 2015.
Unicredit MasterScholarship for graduate studies at Barcelona GSE (declined). 2015.