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Deposit-Lending Synergies: Evidence from Chinese Students at U.S. Universities

Published online by Cambridge University Press:  13 July 2021

Jun Yang Open the ORCID record for Jun Yang [Opens in a new window]
Jun Yang*
Affiliation:
University of Notre Dame Mendoza College of Business
*
jyang23@nd.edu
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Abstract

This paper exploits an influx of Chinese students to U.S. universities from 2000 through 2018 to study synergies between banks’ deposit-taking and lending activities. Banks that are more recognizable by Chinese students experience higher deposit inflows and increase their local credit supply. This credit supply expansion only occurs in information-sensitive credit markets: small business loans and second lien mortgages. Such increase concentrates in nontradable sectors and is more pronounced at locations where managers have more autonomy. The results indicate that deposits from local consumers convey private information about the local credit market, which helps banks in information-sensitive lending.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 57 , Issue 5 , August 2022 , pp. 1960 - 1986
Copyright
© The Author(s), 2021. Published by Cambridge University Press on behalf of the Michael G. Foster School of Business, University of Washington

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Footnotes

I am extremely grateful to Vyacheslav Fos, Nadya Malenko, Alan Marcus, and Philip Strahan for their advice and guidance throughout my work. I also thank Lamont Black, Erik Gilje, Robert King, Andres Liberman, Ayako Yasuda, and Eric Zwick for their suggestions and conference and seminar participants at Boston College, the 2017 BC-BU Green Line Macro Meeting, the 2017 Conference on Corporate Finance and Financial Intermediation, Boston College, Emory University, Michigan State University, Oxford University, University of California San Diego, University of Georgia, University of Massachusetts Amherst, University of Notre Dame, University of Virginia, and Vanderbilt University. I thank Ronnie Sadka and the Carroll School of Management for providing financial support for acquiring the data. Special thanks to Vitor Hadad for continuous support. All errors are my own.

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