Managerial Ability and Bank Lending Behavior

•We examine the effect of managerial ability on bank lending behavior for the period 1990-2017.•We find that more ably managed banks lend more.•The result is hold regardless of bank size and period of time.•We further find that higher managerial ability is associated with greater loan quality. This paper investigates the role of latent, unobservable managerial ability on bank lending behavior. The empirical results suggest that more able managed banks produce higher amount of loans. The result is hold regardless of the size of the banks and period of time. We also find that more ably managed banks have greater loan quality. Results are robust to different econometric specifications and alternative classifications of managerial ability.