Event start date: 09.12.2019 14:00

On 9 December 2019, the National Bank of Ukraine hosted an open research seminar, during which Karolis Liaudinskas, a PhD candidate at Pompeu Fabra University, presented research entitled "Loss of a Lending Relationship: Pain or Relief?", co-authored with Kristina Grigaitė from Bank of Lithuania. The authors studied how large are firms’ costs of switching between banks and what causes those costs. Researchers used loan-level data to estimate firms’ hold-up costs and bank-switching costs induced by banks’ closures. They find that closure of the "Healthy bank" did not affect its clients’ borrowing costs, while the closure of the "Distressed bank" led to a sharp drop in loan rates. The results suggest that distressed banks may use informational monopoly power to exploit their good borrowers. Those findings offer to consider the potential benefit of bank closures when bank failures are present.

Materials from the seminar are available via the links below.