Bank Lending in the Euro Area: The Role of Bank-Firm Switching and Market Concentration — BCL — LU

04.09.2026

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Authors: Gabriele Di Filippo, Gastón Giordana, Bob Kaempff, David Kremer and Léonore Lebouteiller

In 2025, non-financial corporations in the Euro area held bank loans representing more than 92% of GDP, while the debt securities they issued on financial markets represented less than 12% of GDP. Consequently, the Euro area is generally considered a bank-based financing economy. This paper analyzes how lending conditions can change for a firm when it switches banks. The analysis is based on AnaCredit data relating to more than seven million new loans granted by over 2000 banks to non-financial corporations between January 2021 and June 2025. This dataset allows us to identify borrowers who switch banks, observe the credit conditions offered for their loans at the time of the switch, and compare them to loans granted by the same bank to its existing clients with similar characteristics. After a firm has switched banks, we track the evolution of lending conditions on subsequent loans granted by its new bank.

The results confirm that switching banks leads to more favorable lending conditions. Indeed, borrowers who switch banks benefit from lower interest rates, higher loan amounts, and longer loan durations than comparable firms that have not recently switched banks. The magnitude of the rate reduction varies from country to country and is positively correlated with credit market concentration. In regions where the market is more concentrated, banks offer larger reductions, but fewer firms switch banks. However, the extent and duration of these benefits remain limited. After the switch, if the firm takes out new loans from the new bank, the interest rate, loan amount, and repayment duration all converge towards those the bank sets for borrowers with comparable characteristics who have not recently switched banks. Although this result is validated for the entire Euro area, national-level results are more heterogeneous.

The content of this study should not be perceived as representative of the views of the Central Bank of Luxembourg or the Eurosystem. The opinions expressed reflect those of the authors and not necessarily the position of the Central Bank, its management, or the Eurosystem.

This study paper is available on the BCL website: www.bcl.lu

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