Greater competition cut US banks’ ‘insider lending’ – BdF paper

banque-de-france

Greater competition in local US banking markets sharply decreased “insider lending” by executives and owners, a working paper published by the Banque de France finds.

In Competition and agency problems within banks: Evidence from insider lending, Mattia Girotti and Federica Salvadè look at data on US commercial lenders from 1994 to 2005.

The authors calculate the volume of loans that each bank made to its owners and senior managers, and to firms they had an interest in. They evaluate whether

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