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International Similarities of Bank Lending Practices and Varieties of Insolvency Laws: a Comparative Analysis of France and Germany

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Listed:
  • Ingrid Groessl

    (Universitaet Hamburg, School of Business, Economics and Social Sciences, Department of Socioeconomics)

  • Nadine Levratto

    (Université de Paris ouest Nanterre)

Abstract

Economic theory conjectures complementarities between the ranking of creditors in formal insolvency proceedings and the use of collateral in bank loan contracts as well as the existence of relational compared to arm’s length lending. In this paper we seek evidence for these hypotheses taking France and Germany as examples which differ significantly concerning the ranking of in particular secured creditors. On closer scrutiny of empirical studies as well as statistical information we can neither confirm that a high priority for se-cured lenders explains an excessive use of collateral in bank loans nor that a priority for inside collateral promotes relational lending. Regarding relational lending we point to variables lying outside the insolvency law, like culture and history.

Suggested Citation

  • Ingrid Groessl & Nadine Levratto, 2012. "International Similarities of Bank Lending Practices and Varieties of Insolvency Laws: a Comparative Analysis of France and Germany," Macroeconomics and Finance Series 201203, University of Hamburg, Department of Socioeconomics.
    • Handle: RePEc:hep:macppr:201203
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    References listed on IDEAS

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    More about this item

    Keywords

    Insolvency; France; Germany; bank-borrower-relationships; collateral; variety-of-capital-approach; law and finance;
    All these keywords.

    JEL classification:

    • K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation

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