GOFMAN

We provide a simple theoretical framework and show empirically that interbank markets can provide a channel for banks to collude in the market for business loans. By lending funds in the interbank market to a competitor, a bank commits not to compete in the private loan market. Interbank interest rates allow banks to split the benefits from such collusion. Using global syndicated loans data, we show that firms paid 31bps higher spread on $239 billion of loans provided by banks that took an interbank loan from a competitor. Our findings have important implications for the regulation of interbank markets... We construct a sample of over 200,000 supply chains to conduct a chain-based analysis of trade credit. Our study uncovers novel stylized facts about trade credit both within and across supply chains. More upstream firms borrow more from suppliers, lend more to customers, and hold more net trade credit. This upstreamness effect in trade credit is weaker for more profitable firms and..