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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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  • Ingrid Groessl

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

  • Nadine Levratto

    ()
    (Université de Paris ouest Nanterre)

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    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.

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    File URL: http://www.wiso.uni-hamburg.de/repec/hepdoc/macppr_3_2012.pdf
    File Function: First version, 2012
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    Bibliographic Info

    Paper provided by Hamburg University, Department Wirtschaft und Politik in its series Macroeconomics and Finance Series with number 201203.

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    Length: 51 pages
    Date of creation: Apr 2012
    Date of revision:
    Handle: RePEc:hep:macppr:201203

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    Web page: http://www.wiso.uni-hamburg.de/dwp
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    Keywords: Insolvency; France; Germany; bank-borrower-relationships; collateral; variety-of-capital-approach; law and finance;

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