Clément Mazet-Sonilhac wins 2 Best Paper Awards at WFA 2022

Information Frictions in Credit Markets

Clément Mazet-Sonilhac

Winner, USC Marshall School of Business Trefftzs Award for his paper “Information Frictions in Credit Markets” and The Brattle Group Ph. D. Candidate Award for Outstanding Research.

The awards were presented during the award ceremony at the WFA 2022 in Portland, Oregon (June 24-27).


Motivated by empirical evidence I document on local credit markets in France using data on more than 3.5 million bank-firm relationships, I propose a theory of bank-firm matching, subject to search frictions. Firms undergo a costly search process to locate and match with the right banking partner. Upon matching, agency frictions hinder bank's ability to optimally screen and monitor projects. I estimate structurally my model on French data using the staggered roll-out of Broadband Internet, from 1997 to 2007, as a shock to search frictions. I confirm the model predictions that a reduction in search frictions affects the allocation of credit and the dynamics of firm-bank matching. Finally, I use the structure of my model to quantify the impact of this technology-induced reduction in search frictions on loan prices. I find that broadband internet access reduced the cost of debt for small businesses by 4.9%