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How does relationship banking influence credit financing? Evidence from the financial crisis

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  • Christa Hainz

    ()

  • Manuel Wiegand

    ()

Abstract

During the financial crisis asymmetric information in credit markets became moresevere. Did relationship banking help firms to avoid impaired credit financing andwhich credit financing problems did relationship banking help to circumvent? We usesurvey data for 1,139 German firms to analyze how relationship banking works. Wefind that it lowers the probability of higher information requirements from banks. Itdoes not, however, help to avoid constrained availability of bank credit. If credit isgranted, relationship banking makes deteriorated non-price contract terms (i.e. collateraland maturity) less likely. Its impact on interest rates is ambiguous.

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Bibliographic Info

Paper provided by Ifo Institute for Economic Research at the University of Munich in its series Ifo Working Paper Series with number Ifo Working Paper No. 157.

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Date of creation: 2013
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Handle: RePEc:ces:ifowps:_157

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Keywords: Credit financing; relationship banking; financial crisis; access to credit;

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  1. Cole, Rebel A. & Goldberg, Lawrence G. & White, Lawrence J., 2004. "Cookie Cutter vs. Character: The Micro Structure of Small Business Lending by Large and Small Banks," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 39(02), pages 227-251, June.
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