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Bank Lending and Relationship Banking: Evidence from Chilean Firms

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  • Andrea Repetto

    ()

  • Sergio Rodríguez
  • Rodrigo O. Valdés

Abstract

In this paper we empirically study bank-client relationships using a sample of manufacturing Chilean firms. We examine whether concentration and the duration of bank-firm relationships affect the terms of bank financing, evaluating both the volume of bank lending and bank loan costs. Our results indicate that lower concentration, measured by the number of banks a firm borrows from, is associated with lower costs of loans and with a large and positive non-lincar effect on borrowing. The length of borrower-lender relationships, measured by the age of the oldest loan, has a positive effect on the amount borrowed and a negative effect on interest rates paid. When we measure concentration by the number of existing banks (at a geographical level), we find some effects, although of less economic importance.

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Bibliographic Info

Paper provided by Centro de Economía Aplicada, Universidad de Chile in its series Documentos de Trabajo with number 146.

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Date of creation: 2002
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Handle: RePEc:edj:ceauch:146

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Cited by:
  1. Djedidi-Kooli, Salima, 2009. "L’accès au financement des PME en France : quel rôle joué par la structure du système bancaire ?," Economics Thesis from University Paris Dauphine, Paris Dauphine University, number 123456789/8354 edited by Etner, François, September.
  2. Alvaro García M. & Andrea Repetto L. & Sergio Rodríguez E. & Rodrigo Valdés P., 2003. "Concentración, Hold-up e Información de las Colocaciones Bancarias: Evidencia de Empresas Chilenas," Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 6(3), pages 27-44, December.
  3. Brick, Ivan E. & Palia, Darius, 2007. "Evidence of jointness in the terms of relationship lending," Journal of Financial Intermediation, Elsevier, vol. 16(3), pages 452-476, July.

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