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Lending Relationships in Germany: Empirical Results from Survey Data

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  • Dietmar Harhoff
  • Timm Körting

Abstract

We examine empirically the role of lending relationships in determining the collateral requirements, costs and availability of external funding. The data originate from a recently concluded survey of small and medium-sized German firms. In our descriptive analysis, we explore the borrowing patterns and the concentration of borrowing from financial institutions. Using data on line of credit (L/C) interest rates, collateral requirements, and the firms’ use of fast payment discounts we find that relationship variables may have some bearing on the price of external funds, but much more so on loan collateralization and availability. Firms in financial distress face comparatively high L/C interest rates and reduced credit availability. ZUSAMMENFASSUNG - (Kreditbeziehungen in Deutschland: Empirische Ergebnisse einer Unternehmensbefragung) Unter Verwendung eines für Deutschland einzigartigen Querschnittsdatensatzes untersuchen wir in diesem Papier empirisch den Einfluß von Bankbeziehungen auf die Kosten und die Verfügbarkeit von Bankkrediten. Die Daten wurden im Jahre 1997 bei 1509 kleinen und mittleren Unternehmen (KMU) erhoben. In einer ersten deskriptiven Analyse werden Finanzierungsmuster und Verschuldungskonzentration dargestellt. Detaillierte Angaben zu Kontokorrent- und Lieferantenkrediten ermöglichen es uns, in einer mikroökonomischen Analyse die Einflußfaktoren auf die Kosten und die Verfügbarkeit von Krediten zu bestimmen. Demnach scheinen Bankbeziehungen einen wesentlich stärkeren Einfluß auf die Verfügbarkeit als auf die Preisgestaltung von Krediten zu haben. Außerdem führen finanzielle Schwierigkeiten eines Unternehmens zu einer Verteuerung von Kontokorrentkrediten und einer sinkenden Kreditverfügbarkeit.

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Bibliographic Info

Paper provided by Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG) in its series CIG Working Papers with number FS IV 98-06.

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Length: 48 pages
Date of creation: Jun 1998
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Publication status: Published in the Journal of Banking and Finance , Vol. 22(10-11), October 1998, pp. 1317-1353.
Handle: RePEc:wzb:wzebiv:fsiv98-6

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  1. Mitchell A. Petersen & Raghuram G. Rajan, 1994. "The Effect of Credit Market Competition on Lending Relationships," NBER Working Papers 4921, National Bureau of Economic Research, Inc.
  2. Harhoff, Dietmar, 1996. "Are there financing constraints for R&D and investment in German manufacturing firms?," ZEW Discussion Papers 96-28, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  3. Allen, Franklin & Gale, Douglas, 1995. "A welfare comparison of intermediaries and financial markets in Germany and the US," European Economic Review, Elsevier, vol. 39(2), pages 179-209, February.
  4. Sharpe, Steven A, 1990. " Asymmetric Information, Bank Lending, and Implicit Contracts: A Stylized Model of Customer Relationships," Journal of Finance, American Finance Association, vol. 45(4), pages 1069-87, September.
  5. Fabio Schiantarelli, 1995. "Financial Constraints and Investment: A Critical Review of Methodological Issues and International Evidence," Boston College Working Papers in Economics 293., Boston College Department of Economics.
  6. Gale, Douglas & Hellwig, Martin, 1985. "Incentive-Compatible Debt Contracts: The One-Period Problem," Review of Economic Studies, Wiley Blackwell, vol. 52(4), pages 647-63, October.
  7. Bester, Helmut, 1985. "Screening vs. Rationing in Credit Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 75(4), pages 850-55, September.
  8. Bhattacharya Sudipto & Thakor Anjan V., 1993. "Contemporary Banking Theory," Journal of Financial Intermediation, Elsevier, vol. 3(1), pages 2-50, October.
  9. Petersen, Mitchell A & Rajan, Raghuram G, 1994. " The Benefits of Lending Relationships: Evidence from Small Business Data," Journal of Finance, American Finance Association, vol. 49(1), pages 3-37, March.
  10. Mookherjee, Dilip & Png, Ivan, 1989. "Optimal Auditing, Insurance, and Redistribution," The Quarterly Journal of Economics, MIT Press, vol. 104(2), pages 399-415, May.
  11. Mayer, Colin, 1987. "New Issues in Corporate Finance," CEPR Discussion Papers 181, C.E.P.R. Discussion Papers.
  12. Gregory E. Elliehausen & John D. Wolken, 1993. "The demand for trade credit: an investigation of motives for trade credit use by small businesses," Staff Studies 165, Board of Governors of the Federal Reserve System (U.S.).
  13. Boot, Arnoud W A & Thakor, Anjan V, 1994. "Moral Hazard and Secured Lending in an Infinitely Repeated Credit Market Game," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 35(4), pages 899-920, November.
  14. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
  15. Schmidt-Mohr, Udo, 1997. "Rationing versus collateralization in competitive and monopolistic credit markets with asymmetric information," European Economic Review, Elsevier, vol. 41(7), pages 1321-1342, July.
  16. Harhoff, Dietmar & Stahl, Konrad O. & Woywode, Michael, 1995. "Growth and exit of West German firms: an empirical investigation on the impact of liability statutes," ZEW Discussion Papers 95-15, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  17. Kaplan, Steven N & Zingales, Luigi, 1997. "Do Investment-Cash Flow Sensitivities Provide Useful Measures of Financing Constraints," The Quarterly Journal of Economics, MIT Press, vol. 112(1), pages 169-215, February.
  18. Greenbaum, Stuart I. & Kanatas, George & Venezia, Itzhak, 1989. "Equilibrium loan pricing under the bank-client relationship," Journal of Banking & Finance, Elsevier, vol. 13(2), pages 221-235, May.
  19. Berger, Allen N & Udell, Gregory F, 1995. "Relationship Lending and Lines of Credit in Small Firm Finance," The Journal of Business, University of Chicago Press, vol. 68(3), pages 351-81, July.
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