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Information Verifiability, Bank Organization, Bank Competition and Bank-Borrower Relationships Author info | Abstract | Publisher info | Download info | Related research | Statistics Masaji Kano
Hirofumi Uchida
Gregory F. Udell
Wako Watanabe
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This paper investigates whether the benefits of bank-borrower relationships differ depending on three factors identified in the theoretical literature: verifiability of information, bank size and complexity, and bank competition. We extend the current literature by analyzing how relationship lending affects loan contract terms and credit availability in an empirical model that simultaneously accounts for all three of these factors. Also, our unique data set of Japanese SMEs allows us to examine for the first time using micro firm data the value of information verifiability in the form of audited financial statements in setting loan contract terms. We find that firms benefit most from bank-borrower relationships when they do not have audited financial statements and when they borrow from small banks in less competitive markets, which is consistent with a number of different theoretical studies.
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Paper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion papers with number
06003.
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Length: 33 pages
Date of creation: Jan 2006Date of revision:
Handle: RePEc:eti:dpaper:06003Contact details of provider: Postal: 11th floor, Annex, Ministry of Economy, Trade and Industry (METI) 1-3-1, Kasumigaseki Chiyoda-ku, Tokyo, 100-8901 Phone: +81-3-3501-1363 Fax: +81-3-3501-8577 Email: Web page: http://www.rieti.go.jp/ More information through EDIRC
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.: Elyasiani, Elyas & Goldberg, Lawrence G., 2004.
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Rajan, Raghuram G, 1992.
" Insiders and Outsiders: The Choice between Informed and Arm's-Length Debt ,"
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"Lending relationships in Germany - Empirical evidence from survey data ,"
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Berger, Allen N. & Miller, Nathan H. & Petersen, Mitchell A. & Rajan, Raghuram G. & Stein, Jeremy C., 2005.
"Does function follow organizational form? Evidence from the lending practices of large and small banks ,"
Journal of Financial Economics ,
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[Downloadable!] (restricted)
Other versions:
Allen N. Berger & Nathan H. Miller & Mitchell A. Petersen & Raghuram G. Rajan & Jeremy C. Stein, 2002.
"Does Function Follow Organzizational Form? Evidence From the Lending Practices of Large and Small Banks ,"
Harvard Institute of Economic Research Working Papers
1976, Harvard - Institute of Economic Research.
[Downloadable!] Allen N. Berger & Nathan H. Miller & Mitchell A. Petersen & Raghuram G. Rajan & Jeremy C. Stein, 2002.
"Does Function Follow Organizational Form? Evidence From the Lending Practices of Large and Small Banks ,"
NBER Working Papers
8752, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted) Allen N. Berger & Nathan H. Miller & Mitchell A. Petersen & Raghuran G. Rajan & Jeremy C. Stein, 2002.
"Does function follow organizational form? evidence from the lending practices of large and small banks ,"
Proceedings ,
Federal Reserve Bank of Chicago, issue May, pages 383-400.
Full
references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
Hirofumi Uchida & Gregory F. Udell & Nobuyoshi Yamori, 2006.
"SME financing and the choice of lending technology ,"
Discussion papers
06025, Research Institute of Economy, Trade and Industry (RIETI).
[Downloadable!]
WATANABE Wako, 2007.
"How Do Relationship Lenders Price Loans to Small Firms?: "Hold-Up" Costs, Transparency, and Private and Public Security ,"
Discussion papers
07058, Research Institute of Economy, Trade and Industry (RIETI).
[Downloadable!]
Hirofumi Uchida & Gregory F. Udell & Nobuyoshi Yamori, 2006.
"Loan Officers and Relationship Lending ,"
Discussion papers
06031, Research Institute of Economy, Trade and Industry (RIETI).
[Downloadable!]
Hirofumi Uchida & Gregory F.Udell & Wako Watanabe, 2007.
"Bank Size and Lending Relationships in Japan ,"
NBER Working Papers
13005, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
Other versions:
Hirofumi Uchida & Gregory F. Udell & Wako Watanabe, 2006.
"Bank Size and Lending Relationships in Japan ,"
Discussion papers
06029, Research Institute of Economy, Trade and Industry (RIETI).
[Downloadable!] Uchida, Hirofumi & Udell, Gregory F. & Watanabe, Wako, 2008.
"Bank size and lending relationships in Japan ,"
Journal of the Japanese and International Economies ,
Elsevier, vol. 22(2), pages 242-267, June.
[Downloadable!] (restricted) Kenshi Taketa & Gregory F. Udell, 2007.
"Lending Channels and Financial Shocks: The Case of Small and Medium-Sized Enterprise Trade Credit and the Japanese Banking Crisis ,"
Monetary and Economic Studies ,
Institute for Monetary and Economic Studies, Bank of Japan, vol. 25(2), pages 1-44, November.
[Downloadable!]
Hirofumi Uchida & Gregory F. Udell & Wako Watanabe, 2006.
"Are Trade Creditors Relationship Lenders? ,"
Discussion papers
06026, Research Institute of Economy, Trade and Industry (RIETI).
[Downloadable!]
G. De Masi & Y. Fujiwara & M. Gallegati & B. Greenwald & J. E. Stiglitz, 2009.
"An Analysis of the Japanese Credit Network ,"
Quantitative Finance Papers
0901.2384, arXiv.org.
[Downloadable!]
Hirofumi Uchida, 2006.
"Empirical Determinants of Bargaining Power ,"
Discussion papers
06030, Research Institute of Economy, Trade and Industry (RIETI).
[Downloadable!]
Yoshi Fujiwara & Hideaki Aoyama & Yuichi Ikeda & Hiroshi Iyetomi & Wataru Souma, 2009.
"Structure and temporal change of the credit network between banks and large firms in Japan ,"
Quantitative Finance Papers
0901.2377, arXiv.org, revised May 2009.
[Downloadable!]
Wako WATANABE, 2005.
"How Are Loans by Their Main Bank Priced? Bank Effects, Information and Non-price Terms of Contract ,"
Discussion papers
05028, Research Institute of Economy, Trade and Industry (RIETI).
[Downloadable!]
Iyetomi, Hiroshi & Ikeda, Yuichi & Aoyama, Hideaki & Fujiwara, Yoshi & Souma, Wataru, 2009.
"Structure and Temporal Change of the Credit Network between Banks and Large Firms in Japan ,"
Economics - The Open-Access, Open-Assessment E-Journal ,
Kiel Institute for the World Economy, vol. 3(7), pages 1-18.
[Downloadable!]
Fujiwara, Yoshi & Aoyama, Hideaki & Ikeda, Yuichi & Iyetomi, Hiroshi & Souma, Wataru, 2009.
"Structure and Temporal Change of Credit Network between Banks and Large Firms in Japan ,"
Economics Discussion Papers
2009-1, Kiel Institute for the World Economy.
[Downloadable!]
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