This paper provides novel evidence on global non-bank lending during financial
crises and the role of lending relationships. Non-banks curtail their syndicated
credit by significantly more than banks during crises, even after conditioning on
lender*time fixed effects and accounting for unobservable time-varying borrower
characteristics. Differences in the benefits of lending relationships explain most of
the gap: unlike for banks, relationships with non-banks – whether measured by
duration or intensity – do not improve borrowers’ access to credit during crises.
The rise of non-banks could therefore lead to a shift from relationship towards
transaction lending and exacerbate the repercussions of financial crises.