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Empirical Evidence on the Duration of Bank Relationships

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Author Info
Steven Ongena
David C. Smith

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Abstract

We present evidence on the duration of firm-bank relationships using a unique panel data set of connections between Oslo Stock Exchange-listed firms and their banks for the period 1979-1994. We focus on the determinants of the duration of a relationship and the causes for ending an existing bank relationship. We find that duration itself does not greatly influence the likelihood of ending a relationship: short-lived relationships are as likely to end as long-lived relationships. We also find firms that maintain simultaneous multiple-bank relationships are more likely to end a bank relationship than a single-bank firm and that small, highly-leveraged "growth" firms are more likely to end a bank relationship than large, low-leveraged "value" firms.

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Publisher Info
Paper provided by Wharton School Center for Financial Institutions, University of Pennsylvania in its series Center for Financial Institutions Working Papers with number 97-15.

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Date of creation: Mar 1997
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Handle: RePEc:wop:pennin:97-15

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Related research
Keywords: banking relationships; hazard models; duration analysis JEL Codes: G21; C41;

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Find related papers by JEL classification:
G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Mortgages
C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis

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.:

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    Other versions:
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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.)

  1. Ernst-Ludwig VON THADDEN, 1998. "Asymmetric Information, Bank Lending and Implicit Contracts : The Winner's Curse," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 9809, Université de Lausanne, Faculté des HEC, DEEP. [Downloadable!]
    Other versions:
  2. Allen N. Berger & Gregory F. Udell, 2001. "Small business credit availability and relationship lending: the importance of bank organizational structure," Finance and Economics Discussion Series 2001-36, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
    Other versions:
  3. Alexander Cobham, . "The Financing and Technology Decisions of SMEs: I. Finance as a Determinant of Investment," QEH Working Papers qehwps24, Queen Elizabeth House, University of Oxford. [Downloadable!]
  4. Steven Drucker, 2005. "Information asymmetries and the effects of banking mergers of firm-bank relationships," Proceedings, Federal Reserve Bank of Chicago, issue May, pages 140-147. [Downloadable!]
  5. Adrian E. Tschoegl, 1997. "Entry and Survival: The Case of Foreign Banks in Norway," Center for Financial Institutions Working Papers 97-40, Wharton School Center for Financial Institutions, University of Pennsylvania. [Downloadable!]
  6. Krahnen, Jan Pieter, 2000. "Collateral, Default Risk, and Relationship Lending: An Empirical Study on Financial Contracting," CEPR Discussion Papers 2540, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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