The Central Bank of Luxembourg has published a study finding that euro area nonfinancial companies receive lower interest rates, larger loans and longer maturities when they switch banks, compared with similar existing customers of the new lender. These benefits are limited in size and duration, with terms on subsequent loans converging toward those offered to comparable borrowers that had not recently switched. The analysis covers more than 7 million new loans granted by over 2,000 banks between January 2021 and June 2025. Interest rate reductions vary across countries and are larger in more concentrated regional credit markets, although fewer firms switch banks in those markets. The overall findings hold across the euro area, but country-level results are more mixed.
2026-09-04Central Bank of Luxembourg
Central Bank of Luxembourg study finds better but short lived loan terms for firms switching banks
A Central Bank of Luxembourg study finds that euro area companies switching banks initially obtain lower interest rates, larger loans and longer maturities. The benefits fade on subsequent borrowing, while more concentrated credit markets offer larger rate reductions but have fewer switching firms.