Banks, non-banks, and the incorporation of local information in CMBS loan pricing
Peer reviewed, Journal article
Published version
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https://hdl.handle.net/11250/3108402Utgivelsesdato
2023Metadata
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- NTNU Handelshøyskolen [1623]
- Publikasjoner fra CRIStin - NTNU [37994]
Sammendrag
Comparing banks to non-bank lenders, we investigate whether the geographical distance between lenders, borrowers, and their properties is reflected in the pricing of US mortgages that were included in US commercial mortgage-backed security (CMBS) pools during the 2000 to 2017 period. The difference in loan spreads when the bank-borrower distance increases from zero to the median of about 700 miles is 10 basis points, and this effect is more pronounced if the loan is collateralized by a riskier property. On the contrary, geographical distance does not seem to have any effect on the loan spread of mortgages granted by non-bank lenders. The difference in loan pricing across originator types (even after controlling for key mortgage and property characteristics) suggests that banks and non-bank lenders have different incentives, lending technologies, and/or different types of borrowers. Our results contribute to the emerging literature on non-bank lender behavior.