We study bank portfolio allocations during the transition of the real sector to a knowledge
economy in which firms use less tangible capital and invest more in intangible assets. We
show that, as firms shift toward intangible assets that have lower collateral values, banks
reallocate their portfolios away from commercial loans toward other assets, primarily
residential real estate loans and liquid assets. This effect is more pronounced for large and
less well capitalized banks and is robust to controlling for real estate loan demand. Our
results suggest that increased firm investment in intangible assets can explain up to 20%
of bank portfolio reallocation from commercial to residential lending over the last four
decades.
Add to Cart by clicking price of the language and format you'd like to purchase
Available Languages and Formats
Prices in red indicate formats that are not yet available but are forthcoming.