Iñaki Aldasoro, Sebastian Doerr, and Haonan Zhou
Review of Finance, Volume 29, Issue 6, November 2025, Pages 1809–1832, https://doi.org/10.1093/rof/rfaf043
The paper investigates the behavior of non-bank financial institutions (non-banks) in syndicated lending during financial crises, particularly in comparison to banks. Using data from 1995 to 2018 across 148 countries and 83 financial crises, the authors examine how non-banks and banks respond to borrower-country crises and the role of lending relationships in shaping credit dynamics.
Non-banks reduce their syndicated lending to non-financial firms significantly more than banks during crises (about 19%). This disparity persists even after accounting for differences in lender funding models and borrower characteristics. However, the gap narrows by over 50% when lending relationships—measured by duration and frequency—are considered. Non-bank relationships are less valuable, less frequent, and shorter-lived compared to banks, offering borrowers fewer benefits during crises.
The paper also explores the real economic effects of non-bank lending behavior. Firms dependent on non-banks face steeper declines in total syndicated credit during crises, which translates into sharper reductions in investment and employment. Borrowers connected to non-banks also experience higher loan spreads during crises, indicating that non-bank relationships are less effective in cushioning financial shocks.
The findings have significant implications for financial stability and regulation. The rise of non-banks, while expanding credit availability in normal times, may amplify the adverse effects of financial crises. The findings suggest that regulators should monitor non-bank lending more closely and adopt a holistic approach to financial regulation, considering the migration of risks from banks to non-banks.