Loans and human capital: Manager mobility in the financial sector and credit allocation

Abstract

Information is a core input in financial intermediation, yet little is known about how it is transmitted through labor mobility. In this paper - for the first time - we are able to link administrative data on loan contracts and employment histories to track the movements of bank managers and their portfolios of client firms across financial institutions. We show that when a manager switches employers, firms in their prior portfolio are five times more likely to initiate a lending relationship with the new bank. This effect reflects both a higher propensity of firms to apply for credit and a greater likelihood of loan approval. To isolate the causal role of manager mobility, we exploit variation in the timing of job switches and leverage exogenous shocks to mobility induced by branch closures. Our findings underscore the importance of individual-level human capital in shaping credit market outcomes and highlight a novel channel for information transmission in the financial sector.

Enrico Stivella

PhD student in Economics

Mostly doing research in Economics of Science, Innovation and Human Capital. If not, playing basketball or getting lost in the mountains.