In this paper, we explore the cross-section of Japanese banks’ industrial loan portfolios over the last 34 years. We show that banks with diversified lending (generalists) and banks with focused lending (specialists) coexist. Similarly, industries with diversified borrowing (generalists) and industries with focused borrowing (specialists) also coexist. Interestingly, specialist banks and specialist industries rarely interact, suggesting significant overlap in banks’ loan portfolios. We introduce a model to describe these interaction patterns and identify a persistent and economically meaningful set of generalist banks/industries. We find that size is an important determinant for being a generalist. Finally, we show that generalist banks tend to be less vulnerable compared to specialist banks
