The information content from lending relationships across the supply chain

• Grant number: 22/00110-0
• Support Opportunities: Regular Research Grants
• Start date: August 01, 2022
• End date: July 31, 2023
• Field of knowledge: Applied Social Sciences - Administration - Business Administration
• Principal Investigator: Rafael Felipe Schiozer
• Grantee: Rafael Felipe Schiozer
• Host Institution: Escola de Administração de Empresas de São Paulo (EAESP). Fundação Getúlio Vargas (FGV). São Paulo , SP, Brazil
• Associated researchers: Theo Cotrim Martins

Abstract

This research aims at investigating whether bank relationships across firms connected through product market ties affect the supply of loans to these firms. To identify a firm's customers and suppliers, we will use a unique database containing information on firm-to-firm payments through money transfers (TEDs) and payment bills ("boletos"). On the one hand, lending to borrowers that are interconnected through the supply chain enhances the banks' information set, whereas on the other hand, it increases loan portfolio risk by means of cross borrower contagion. We intend to study whether the volume of loans and the loan terms offered to a borrower are affected by the fact that the same bank lends to the borrower's customers and or suppliers. In addition, we will investigate whether loan terms to a borrower are affected by new information about the creditworthiness of its suppliers and customers. (AU)