Journal of Financial and Quantitative Analysis Vol. 61 No. 2 2026

The Industry Expertise Channel in Mortgage Lending

Yongqiang Chu¹; Zhanbing Xiao²; Yuxiang Zheng³

¹ University of North Carolina at Charlotte Belk College of Business and Childress Klein Center for Real Estate · ² City University of Hong Kong College of Business · ³ Rutgers University School of Business – Camden

Abstract

We show that banks use industry knowledge acquired through corporate lending in mortgage lending, a phenomenon we refer to as the “industry expertise channel.” Specifically, banks that specialize in particular industries expand their mortgage lending activity in regions where those industries are concentrated. The impact of industry expertise increases with information asymmetry and borrower risk. In addition, mortgages originated from this channel contain more soft information and perform better. The effect of the channel increases after unexpected industry distress and the 2008 financial crisis, suggesting that the effect is likely causal.

DOI

10.1017/s002210902510210x

Volume

61

Issue

2

Pages

738-767

Language

en

Sources

openalex crossref

Cite

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